22 Jul

Things to consider wehn Buying in a New Development


Posted by: Valerie J Cavers

22 Jul 2016

Things to Consider When Buying In a New Development

Things to Consider When Buying In a New DevelopmentWith plenty of activity in the real estate market and more new building slated over the next few years, here is my list of “Things to Consider When Buying in a New Development”.


Some buyers attend the display suite and consider a purchase directly with the developer sales person or the developers Realtor. Regardless of which kind of property you choose to purchase – new or existing – I always suggest you have a Realtor represent you. I have seen contracts where the buyer has not reviewed the details properly and they are not fully informed before they sign. The developer’s agent or Realtor is acting on behalf of their client – the seller. You should also have your own representation.

Interest Rates

If you are buying a home more than a year or more before completion, you may not know your actual fixed costs for the mortgage until well after you have signed your purchase agreement and paid your deposits. Depending on the lender and timeline, your costs may be unclear for several months. Even if you have a rate hold – things can change along the way with financing rules or the market. I always keep in touch with my clients and within a few months of completion we revisit the overall plan and make some decisions. Your down payment may need to change, the property value may shift or you may have experienced a life changing event (please don’t quit your job). Remember: Keep your mortgage broker in the loop.

Goods and Services Tax (GST)

When you buy a newly built home pay special attention to the contract price. In Canada Goods and Services Tax (GST) of 5% is payable on the purchase of a new home. In many cases the purchase price is set excluding GST so you need to add that tax amount to determine the total purchase price. If the home price is under $450,000 and will be your primary residence, you are eligible to receive a rebate equivalent to 36% of the GST. The rebate will be deducted and the new purchase price will be set Net of GST. There are many online calculators to determine this number and it should also be clear on the purchase agreement. Your mortgage broker will also calculate to confirm. For example a $400,000 purchase price excluding GST will result in an actual purchase price of $416,850. ($20,000 in GST minus the rebate of $3150). A purchase price of $500,000 excluding GST will result in an actual purchase price of $525,000 ($25,000 GST and no rebate).

Allowances and Discounts

In some cases you will have the option to upgrade the home with higher quality items such as flooring or a basement. These items can be included in the purchase price with no additional cost. The agreement will clearly outline the details and no cost will be associated for these items. However, if the contract states there was an allowance as a credit with a cost associated this will be considered a buyer credit and the amount on the contract will be deducted from the purchase price by the financial institution. There will be no financing on these items and the buyer will be responsible for the additional cost. This is common when buyers want to include furnishings such as in a display home. This can be a surprise to buyers as they are not fully clear on the purchase price and what is really included. It is important to review the contract closely with your own buying agent (Realtor) and if any financing questions arise – with your mortgage broker – to ensure you know your options.

Property Taxes

When a developer applies to the local city for a building permit the city will set the municipal taxes for the entire development. Once the developer is near completion and applies to the city for occupancy permits or submits the strata plan (for condo developments) it can still take some time for the city to determine the property tax for each home or condo unit. More and more lenders are using a percentage of the purchase price to determine the property taxes at the time of application unless confirmation of taxes can be provided by the city. In some cases this can be .5%-1.75% of the purchase price which can make a difference to qualify for financing. Your Dominion Lending Centres mortgage broker can review options with you to select the best overall financing solution for your purchase and avoid delays in securing an approval.

Strata fees – start low and grow

Since the strata plan on a new condo development isn’t in place when you make an offer to purchase a new home the strata fees on the purchase agreement will be set low. I recently had a client purchase a condo for $750K and the strata fees were under $170 per month. My clients understood this strata fee will increase to a higher level once the operating budget is set by the strata council and they should set their personal budget accordingly to expect an increase. For more details on the process and to understand the responsibilities of the developer, the strata corporation and the new buyer, click here.


When a developer sells their houses or condo units well in advance of completion some original buyers may decide not to complete on the purchase and choose to assign the property to a new buyer. In this case there may be a lower or higher new purchase price. If there is a lower price the GST on the original price will apply. If the price is higher the GST on the original purchase price will apply. The property purchase transfer tax will apply to the new purchase price. The final property purchase transfer tax will be determined depending on the details of the transfer and the value of the property within limits for exemption is typically set by provincial government. For financing purposes, not all lenders will consider an assignment as the new purchase contract is between the original buyer and the new buyer and not with the developer. Some lenders will only consider the original price and the new buyer will have to pay the difference between the two amounts as the down payment to complete the purchase. Lenders who consider the new price will require a full appraisal to confirm the current value of the property. They will also need the original contract in addition to the new purchase contract and want to know details on the relationship between the seller and the buyer.

by P.Tonkin, DLC


Add to thise things, the added costs of eavestroughing, landscape, fencing, and decks and the potential for “flat tires” with construction debri.  Always double check your plan to buy NEW with a thorough search of existing homes, make sure you are committed to a NEW SUBDIVISION, for our NEW HOME.

There are many things to consider when you purchase a new home. Always consult your professional advisers, including your Realtor, Mortgage Broker, Financial Planner, Accountant and Lawyer to ensure the purchase helps to meet your lifestyle and financial goals.  REach out to Valerie Cavers and I will be pleased to repreent your Mortgage needs and be part of your Proffesional advisers for you impending purchase.   vcavers@dominionlending.ca, or 613 866 4183

6 Jul

Top 5 Reasons People Don’t Qualify for a Mortgage


Posted by: Valerie J Cavers

3 Nov 2015

Top 5 Reasons People Don’t Qualify for a Mortgage

Top 5 Reasons People Can’t Qualify for a MortgageI receive calls every month from people who want to know how to qualify for a mortgage because they were declined by their bank. In many cases I can help them and in some cases they have to wait – but we identify what they need to do to get in a better situation to qualify.

Here are the top 5 reasons why people don’t qualify for a mortgage with their bank and come to see an independent mortgage specialist.

#5 Lack of a Down Payment or Equity

With the dwindle of cash-back mortgages offered by the banks, borrowers now have to come up with the down payment on their own. They can receive it as a gift from a family member – but no more cash-back from the lender used for down payments. Minimum down payment is 5% for the purchase of an owner-occupied home or 20% for a rental property. Minimum 20% equity in the home if it is a refinance. This will help you qualify for a mortgage.

#4 Insufficient Income

With the high price of homes even starter homes, sometimes people simply don’t earn enough money to manage a mortgage payment, property taxes and strata fees along with existing consumer debt and still have a life. For some home buyers, the only other option is to access more money for a down payment (gifted) or try to purchase a home with legal rental income or look at alternative lenders who accept room and board and other sources of income to help you qualify for a mortgage. In some instances, home buyers will look for someone else to go on title to add income to the application.

#3 New Mortgage Rules

For those with less than 20% down payment, the new mortgage rules are adjusted to the debt servicing ratios and amortization for borrowers. The new rules for debt servicing apply to those with good credit scores and allow for a max of 39% (gross debt servicing – GDS) of gross monthly income to cover the mortgage payments, property taxes and 50% of the strata fee. In addition a max of 44% (total debt servicing – TDS) of gross monthly income is allowed to cover the same and other consumer debts such as loans, credit cards and lines of credit. The maximum amortization was also reduced from 30 years to 25 years – effectively tightening qualification for borrowers equivalent to a 1% interest rate hike.

#2 Credit Issues

Some people don’t realize if they are late on credit card payments, their mortgage or loan payments the lender will update the credit bureau agencies and the late payments will reflect on their credit report, lowering their credit score. Other items can also effect credit scores such as a collection (if you didn’t pay that parking ticket or fitness membership fee they can send to a collection agency) and those marks on your credit report make your score drop like a rock. Going over your credit card limit, and applying for credit often requiring your credit report to be pulled by the bank, auto dealership and credit card companies will lower your score. Finally, consumer proposal and bankruptcy will greatly impact your score, which can stay on your report for up to 7 years if real estate was involved as is the case with bankruptcy.

#1 Too Much Debt

There are a growing number of consumers doing – well – too much consuming. Credit card debt is on the rise and over use of lines of credit are putting some people in a debt overload situation. Some pre-home-buyers go out and purchase that amazing new truck, along with a large monthly payment, which pushes their total debt servicing (TDS) ratio over the limit. Nice new truck – no home with a garage. Some home owners have so much consumer debt that they are unable to refinance their home to consolidate the mortgage and the credit card debt because the amount exceeds the maximum loan to value allowable (currently 80% of the value of the home) and if housing prices stabilize or drop in some areas – this makes it more difficult for home owners to qualify for that new mortgage and lower payments. Paying off your debt will help you qualify for a mortgage.

P.Tonkin, DLC

Do you want more information for your next mortgage?  Dominion Lending Centres – we’re here to help!  I’m always looking after my clients best interest.  Estabilishing credit, cleaning up credit, consolidating debt, saving for a down payment.  Happy to help!  Valerie J Cavers, www.valeriecavers.ca

28 Jun

Building a New Home ? Completion vs. Draw Mortgages


Posted by: Valerie J Cavers

Building a New Home? Completion vs. Draw Mortgages

Building a New Home? Completion vs. Draw Mortgages     Just today, chatting with a long time client I get the exciting news they are looking to build a new house for themselves.  I thought perhaps this might be a good time to make this post.

If you are considering building a new home, then you need to be educated on the difference between draw and completion mortgages. When you meet with a builder, there is tons of terminology and information you should be aware of so you are properly covered.   Here is just the tip of the iceberge.

Completion mortgage means that the builder does not expect any funds until you take possession of your new home. Before the building process begins, you will have to go to your mortgage professional to get your application verified for the build to start. The benefits of this option are that you don’t have to put down any payments before you take possession, you can add upgrades to the mortgage, and the lender doesn’t require all final information from you until 30 days before you take possession. During this build process you will want to take extra care of your finances to ensure nothing changes, which could put your initial approval in jeopardy. Any changes that could possibly change your financial position and your credit should be discussed with your mortgage professional. This can include things like switching jobs, buying a car, and taking out any new loan.

A draw mortgage is preferred by home builders because it allows them to receive portions of funds during predetermined stages of the build process. To obtain a draw mortgage, the beginning process is the same and you will have to go to your lender to be verified for the build to begin. The benefits of this option are that the builder is able to manage their cash flow, inspectors are sent to verify stages of development are met, and funds sent to the builder are handled through a lawyer. There are some extra costs associated with this option though. Inspections will incur a cost upon each stage met and interest payments may be incurred as well. You also do not have the option to add upgrades throughout the build process with a draw mortgage as the first advance sets the loan in stone.

As always, if you would like to discuss draw and completion mortgages in preparation for your new build contact me, Valerie Cavers at Dominion Lending Centres, The Mortgage source! We are happy to help you figure out your financial future and your NEW DREAM HOME!

23 Jun

How to Maximize Your Cash Flow!


Posted by: Valerie J Cavers

How To Maximize Your Cash Flow While Increasing Your Net Worth By Having a Mortgage Plan, by: K Bay, DLC

How To Maximize Your Cash Flow While Increasing Your Net Worth By Having a Mortgage PlanInterest rates are only one of many features that should be looked at when you are applying for a mortgage. But all things being equal, the interest rate may be more important than you think.

I was reviewing mortgage options with a client and the only thing they were interested in was the mortgage rate. There was no concern about all the other conditions that could end up being quite costly and since I could only offer him what he considered a small reduction, the client said “the bank’s rate was only a little higher and I feel more comfortable leaving everything I have with my bank for such a small difference.” What was the difference? I will get to that in a minute.

The mortgage renewal form you get in the mail is another cautionary note. I have had clients send me a copy of their renewal form. So far, in every case the renewal rate was higher than what I was currently able to get them. The last one I saw was .25% higher than what I could offer.

According to a recent Maritz/CAAMP survey, clients who used the services of a Mortgage Broker benefited with an interest rate .045% lower than those that dealt directly with their lenders.

So what does this fraction of a percentage mean for you? Let’s look at a $500,000 mortgage at 2.64% compared to 2.84%. That is only .2% or, to look at it a different way, it is about $50 a month or $600 a year savings by taking the 2.64% mortgage.  NO DON’T PANIC, not current rates, was a post form January, but so worth the REPEAT. Today Banks are offering 2.79 or 2.69 when we are offering 2.49 or 2.44, some as low as 2.39.  The point is the SAVINGS CAN WORK FOR YOU!

Here are a few options to increase net worth.

  1. You take the 2.64% rate and you invest the $600 a year into a growth mutual fund that averages 10%. Even though over the years, as your mortgage goes down, the savings may not be as great, you make up the difference and keep investing that $600 a year for the next 30 years. That is a small difference, but in 30 years it has added up to over $100,000 in your tax free savings account.
  2. You take out the 2.84% and say I like my bank and I am comfortable with the bank making the extra money and increasing their bottom line off my mortgage.
  3. With interest rates being so low, you could look at increasing your cash flow by stretching out your amortization and lowering your payment. Then you take the extra cash flow and invest it with your financial adviser in your tax free savings account.
  4. If you have extra equity in your home and have not contributed to your Tax Free Savings Account, consider refinancing and topping up your TFSA. As of 2016, the accumulative amount you can contribute is $51,000 per person 19 years or old in BC. So that would be $102,000 per couple. Invest that $102,000 and get an 8% return, you end up with $698,544 tax free money after 25 years and you paid back the mortgage and interest payments. If rates stayed the same throughout the 25 years at 2.69%, the whole $139,906 would be paid back. So you make a tax free profit of $558,638 by freeing up some capital to invest. Your total cost is $37,906 in interest.

There are many details to a mortgage and the rate is just one of them. Any of us here at Dominion Lending Centres would be happy to review your future mortgage needs to make sure you are maximizing your mortgage to your benefit.

Give me a shout, let’s find you some money that we can get yo investing and improving your NET WORTH!


20 Jun

Don’t SIMPLY RENEW! See what your Mortgage Agent can do!


Posted by: Valerie J Cavers

Don’t Renew!  See what’s available!

Don't Renew! Renegotiate!Everybody wants to save money on their mortgage!

A new home buyer is especially diligent when shopping for the best mortgage.

They make the effort to:

find out the options

compare rates and costs

compare flexibility

This home buyer then moves into their new home and their mortgage can easily become something they don’t think about often. They might have a growing family and an ambitious career. In the meantime, the mortgage payments are happening on automatic pilot.

Eventually their lender sends them a letter to let them know that their mortgage is coming up for term renewal. That borrower is faced with some decisions to sort out.

1. Should they do things the “easy” way and sign the offer from their current lender?

2. Have they fully considered their current situation?  Have their needs changed?

3. Do they need to pay out debts, top up RRSP’s, are they needed updates to the home?

4. Should they move their mortgage to another lender?

The answer? You guessed it! Don’t Renew, Don’t Sign the offer, ask your Mortgage Agent!!

1. Sadly your lender might not be offering you the BEST RATE in your renewal offer. 

2. Work with me I’ve access to many different lenders so you can better assess your options. Even if I’ve not worked with you berfore, I can still help you sort out your renewal.

3. Have me compare options for you including the option from your current lender. This analysis will include any possible costs for moving the mortgage and list possible advantages to moving to another lender.

4. Then decide. It will cost you nothing to ask and it could save you thousands of dollars.

Remember the effort when you first bought your home? Well you only need a small fraction of that effort to ensure you get the best mortgage when renewing your mortgage term.

It is not unheard of to have a mortgage renewal offer of a whopping 1% higher than competitive rates. On a mortgage of $400 000 that would cost approximately $4000 extra per year! I have also seen decent renewal offers where it was clear that the client was fine to stay where they were.

No matter what your final decision, it pays to consult with a Dominion Lending Centres Mortgage Agent, before you sign the “easy “offer from your current lender. Go ahead and make that call.

Please reach out, if I can find you savings we will, if we can find more money at the end of the month, let’s do that for you, and if we need to simply sign that renewal as circumstances are such we can’t get better, or we can’t qualify, or credit is poor, we can make that decision together, and I give you the HONEST ANSWER!  Just last week, I advised a client, SIGN IT,just sign the renewal they were not in a position to qualify for thier current mortgage.

I’d like to help out, just ask!

Valerie J Cavers, DLC, The Mortgage Source, Cumblerland ON


by C Horvath, DLC

17 Jun

Divorce and What Can Happen with the Mortgage


Posted by: Valerie J Cavers

Divorce and What Can Happen With the Mortgage

Divorce and What can happen with the Mortgage.When tough times put stress on families sometimes the end result is divorce. While no one ever wants to see this happen sometimes it is inevitable. Recently, CMHC changed the rules about how much a house can be refinanced for, they have set the limit at 80% of the property value so that refinances would no longer fall under the insured mortgages. What they also did was set some guidelines for couples who are divorcing.

When a partnership in a home is being dissolved, that partnership can be a marriage, common law relationship or simply two owners of a property, it is now considered a sale. This means that the existing mortgage will most likely be paid out or in some cases one of the spouses can assume that mortgage and possibly increase the amount. Most likely it will mean that one spouse will purchase the home from the other. Here’s the difference when we are in this situation, the home can be purchased with just 5% down payment again as it doesn’t fall under the refinance rule.

One other thing to consider under the divorce rules is child support. As many parents have learned lately, child support and section 7 spousal support are liabilities for many lenders. So if you do have a $2,000 a month support payment, then that is the same as having a $2,000 dollar car payment. Not all lenders are looking at that the same, some have allowed us to reduce the yearly incomes by the amount of child support. The biggest difference here is of course that the reduction allows you to qualify for more mortgage, it’s just a matter of knowing which lenders work the system which way and a skilled mortgage broker will know the difference.

Ideally, of course, the divorce never happens but one way around child support being paid is joint custody where it is shared 50/50 and no liability is forced upon either spouse allowing them to maximize their purchasing power as the start their new lives.

What also needs to be considered is that this needs to be done in writing, separation agreements are legal binding documents that tell the lenders what your responsibility is to the other partner in the divorce. We have also had situations where a statutory declaration saying that you have no responsibility to the other partner has been sufficient especially in cases of common law separations.

So many in’s and out’s to be considered when embarking on dividing your households and of course we here at Dominion Lending Centres would always advise legal counsel first and then talk to your mortgage brokers about what is required for the mortgage process.

by: L Lane DLC

Life’s circumstance, it happens to the best of us, and I have often worked with both SIDES in this instance. I mean who wants to share their life’s on goings with more people than you have to.   What is said ot me by one party, is not disclosed to the other spouse.  I look forward to helping you through this, it’s a tough road but there is certainly light at the end of the tunnel, one step in front of the other!

Valerie J Cavers


16 Jun

Life Happens, Let Your Home Help


Posted by: Valerie J Cavers

Life Happens, Let Your Home Help

Life Happens, Let Your Home HelpSometimes “life happens”, and when it does, your home can be your savior if you have accrued some equity in it. Maybe you’ve been out of work, run up your credit cards and driven your credit rating into the ground. Perhaps, you’ve decided to leave the job you hate and venture out into the world of owning your own business. Whatever it may be, the equity in your home can help.

I recently helped a client who had maxed out her high interest credit cards due to not being able to work for a couple of years, and the credit card debt had lowered her credit score substantially. She was now back to work as a self employed consultant earning a good income, but the $1,000 monthly interest payments she was paying was seriously eating at her cash flow and not reducing the principal she owed. Dead money!!

Luckily for her, she had great equity in her condo, so I was able to provide her with an Equity Take Out Mortgage. The mortgage lender I chose was able to loan her money based on the strength of her property and the low loan to value of the mortgage based on her equity, NOT her income or credit score.

Here are the numbers:

Mortgage Amount $75,000

Rate: 4.75% (due to low credit score and equity take out)

Monthly Payments: $425.59

Savings per month: $574.41

In this case, my client was able to pay off her credit card debt and had a fair amount of money left over to invest in her business and her future.

In the end, she was very happy to be able to get her finances and business back on track, and start her life anew!

by: J Thomson DLC

Call me, I get “life happenstance”, and as licence Mortgage Agent with a great range of lenders availaable to me, we can help you out, provide some well needed relief, and cash flow!

Valerie J Cavers


14 Jun

Renovating Your Home


Posted by: Valerie J Cavers

 Renovating Your HomeDid you know you can get a mortgage for renovating your home? Many home buyers and existing home owners are deciding to get more bang for their buck by purchasing a home that needs some improvements. Whether you are renovating at the time you buy or waiting for a few years, there are financing options available.

For home buyers, you may want to consider a “purchase plus improvements” mortgage when renovating your home. Many lenders offer these even if you only have a 5% down payment. The lender will require proof of the work to be completed in renovating your home. They will add this quoted amount to the purchase price, deduct the down payment and determine your mortgage amount. If you are buying with less than a 20% down payment, insurance fees by CMHC or Genworth will be added to the mortgage. The lender and insurer will typically allow a maximum of 10% of the value of the home to a maximum of $40,000-$50,000. If it is going to cost much more for renovating your home a construction draw mortgage would be required.

At the time of completion on your purchase, the lender will fund the mortgage proceeds to the lawyer and condition a hold back for the renovation funds. You will have to use your own funds (or borrowed from family or your line of credit) for renovating your home. The remaining funds will be released by the lawyer upon proof (appraisal) confirming the work quoted has been completed. There is typically a 90 day period for work to be complete but this can be extended if required. Of course, during this time you are making mortgage payments on the full mortgage amount.

Buy a home $500,000

Renovate $ 50,000

Down pay $110,000

Mortgage $440,000

For existing home owners the same financing option for renovating your home is available. The one exception is your maximum mortgage amount for the existing mortgage and new funds for renovating your home can’t exceed 80% of the value of the home.

by P.Tonkin DLC

For some referenced on renovation your home:




13 Jun

8 Considerations for the First time Home Buyer


Posted by: Valerie J Cavers


8 Considerations For The First Time Home Buyer

Top 8 Benefits of Using a Mortgage Broker1. Create yourself a Budget and stick to it, so you can keep your finances on track. Planning a budget will help you identify uneconomical expenditures and help you achieve your financial goals. Having a budget can also decrease your stress levels, prepare you for unexpected costs and help you plan for your future of home ownership.

Some of the things you should consider in a budget are all your sources of income, mortgage payment, all loans, condo fees, utilities, cable, internet, phone bills, credit card debts, entertainment expenses, clothing, food, transportation expenses, Insurance (auto, house, life), personal grooming, pet care, donations, child care and an emergency fund which can assist in those unexpected costs like an exterior leak, plumbing issues or just those unforeseen repairs and maintenance issues that could arise.

2. Before you start looking at homes, meet with your Mortgage Broker so they can assist you in figuring out how much home you can afford, get you pre-approved for a mortgage loan and give you the information you need for planning and preparing to save for your down payment. It can be very disappointing to find your dream home only to find out you don’t qualify.

During your qualification period and before you purchase a home, avoid making any big purchases like a new car or buying furniture as these expenses will have to be factored into your debt servicing ratios and could seriously jeopardize your loan approval.

3. Part of your budget plan is to know and consider the additional costs before the purchase of your home. Legal fees, mortgage insurance premiums, life and disability Insurance, Fire Insurance, house insurance, strata fees, appraisal, home inspection, property survey, moving costs, appliances, home maintenance equipment, purchase deposit, down payment, GST if it’s a new construction, property tax, and possibly property transfer taxes. The amount of this property transfer tax will depend on your province and the amount of your home purchase price.

4. Your realtor should be someone you can trust, who understands your needs and will take the time to educate you through the home buying process and the current real estate market conditions in your chosen area.

Your realtor will provide a variety of services to make the complexity of purchasing a home seamless. For example, they will arrange appointments of potential homes, assist in the Contract Of Purchase And Sale agreements, obtain and review the strata minutes, negotiate the home offer on your behalf, inform you of facilities and public services that are available in your neighborhood and current future zoning regulations. Simply, they will streamline the biggest investment purchase that you will ever make.

5. Have your home or strata property inspected. This is one of the most important steps to consider when buying a home, to make sure your home is a sound investment and a safe place to live. If significant defects are revealed by a home inspection, you can back out of your offer, free of penalty, within a certain time frame. Condominium buyers will tend to focus on the Form B certificate that will identify any major issues and costs by the condominium corporation.

6. If there is anything unclear to you while you are preparing the Contract Of Purchase And Sale have the Purchase And Sale Agreement reviewed by your real estate attorney before signing this legal document.

7. Subject Clauses on your Offer To Purchase is highly recommended, especially for first time home buyers. For example a

  • subject to a satisfactory home inspection
  • subject to arranging your mortgage financing

It is of great significance to know that “subject clauses” do not “elude” you to avoid your legal responsibilities in the contract and you must make every attempt to fulfill the conditions that you have set. During this time, it is the seller’s discretion to continue to accept other offers even after the seller has accepted your offer with subjects.

8. On Closing Day, all parties will sign the papers at the lawyer’s office, officially sealing the deal. This is the day that ownership of the property will be transferred to you. On this day it is your job to provide your mortgage broker with your lawyer’s information, as they will be the ones to forward a copy of the Purchase And Sale Agreement to your lawyer as well as inform your lender of your lawyer’s information.

Proof of insurance will need to be obtained, so arrange your Home Insurance before closing and bring the policy with you to your appointment, have your certified cheque or bank draft with closing balance payable to the lawyer’s firm’s trust account, a VOID cheque or a pre-authorized payment form and bring two pieces of valid identification with you like a valid driver’s license or passport. The second piece of identification can be your social insurance card, birth certificate or credit card from a major bank.

Closing funds will be arranged by your lawyer to the seller’s lawyer, the transfer and mortgage will be registered and you will be given the keys to your new home! Finally you take possession.

There are many aspects to consider with your mortgage and home purchase so it would be wise to contact your trusted Dominion Lending Centres Mortgage Professional who can navigate you through the home buying process and give you the resources you need for a successful first home! Give us a call today so we can help you through these steps of home ownership!


J.Picco, DLC

9 Jun

Accelerated Bi Weekly vs Bi weekly Payments


Posted by: Valerie J Cavers

  Accelerated Bi-Weekly vs. Bi-Weekly Payments

Accelerated Bi-Weekly vs. Bi-Weekly PaymentsWhen signing your mortgage commitment letter you will have to choose your payment frequency. If your goal is to re-pay your mortgage as quickly as possible, then you need to understand how different payment options will affect your repayment schedule.

So what are your options?

In general, most lenders will offer the borrower the option to decide which repayment schedule fits best with their lifestyle. The options include monthly, semi-monthly, bi-weekly, accelerated bi-weekly, weekly and accelerated weekly payments. Let’s use some simple math to determine which payment frequency will assist you in paying back your mortgage in the shortest time possible.

For the purposes of this exercise and to keep things simple, let’s use $100,000 as our mortgage amount. We’ll use a 5 year fixed rate at 2.54% with a 25 year amortization period and interest being compounded semi-annually.

Increasing your payment frequency doesn’t mean shortening your amortization.

As you can see from the table above, choosing to pay your mortgage more frequently doesn’t result in reducing your amortization schedule. The key to reducing your amortization is to make sure you choose an accelerated re-payment schedule.

We are going to focus on Accelerated bi-weekly vs. bi-weekly payments but the same principle can be applied to accelerated weekly payments as well.

By accelerating your repayment schedule, you reduce your amortization by 2.5 years.

Okay, we’ve just determined that accelerating your mortgage payments will reduce your amortization and the interest you pay. How does accelerated bi-weekly vs bi-weekly result in more principle being repaid?

It’s important to think of your payments as a stream of income for the mortgage lender. Mortgage payments are comprised of principal and interest payments. The interest is calculated based on your outstanding principal balance, meaning once the interest has been paid, the remainder of your payment is used towards paying down your principal balance.

By choosing an accelerated repayment schedule, the monthly payment is divided by 2 (bi-weekly) or by 4 (weekly). There are 52 weeks in a calendar year so if you make 26 bi-weekly payments, you are in effect paying your Lender the equivalent of 13 months of payments per year compared to 12 months payments with all non-accelerated repayment schedules.

This accelerated repayment of principal is what shortens your amortization.

13 monthly payments ÷ 26 = accelerated bi-weekly payment

Example: ($449.96 per month x 13 months) ÷ 26 = $224.98 accelerated bi-weekly payment

With a non-accelerated or regular payment plan, the Lender takes 12 months worth of payments and divides this by either 26 or 52 to come up with the bi-weekly (or weekly) payment. With this adjusted payment, the Lender still receives a stream of income of 12 monthly payments per year, so there is no additional principal available to accelerate the amortization.

12 monthly payments ÷ 26 = regular bi-weekly payment

Example: ($449.96 per month x 12 months) ÷ 26 = $207.67 regular bi-weekly payment

So now you know why choosing accelerated bi-weekly vs. bi-weekly payments results in 1 extra month of payments per year, which in turn shortens your amortization.

I always recommend this to anyone who can afford the increase in payment but I understand this option isn’t right for everyone. Another option to help shorten your amortization is to increase your payments, meaning more principal paid.

When you’re choosing your next mortgage, make sure you discuss payment options with your Dominion Lending Centres mortgage professional that align with your overall goals for repaying your mortgage.

Brent Shepheard, DLC