The advantages for home buyers to obtain a mortgage pre-approval.

Obtaining a Pre-approval

A mortgage pre-approval from a mortgage lender says you are approved for a mortgage before you have selected a specific property. You simply fill out a mortgage application and provide the lender with income documentation and consent to pull your credit report and evaluate your finances for credit worthiness. The lender will process your application like a traditional mortgage request and will advise you the amount of money that you can borrow.

Knowing Your Budget

One of the big advantages of going through this pre-approval process is that you now know your borrowing limit. You know exactly how much money you can borrow for your home purchase. You also know how much your mortgage payment will be. People often spend time looking at properties that they could never afford or be approved for but when you have a pre-approval in hand you know exactly which properties you should search.

Negotiating With Strength

Having a mortgage pre-approval will give you increased negotiating power. When you look at properties as a pre-approved buyer, real estate agents and sellers will treat you as a preferred customer. Buyers who are not pre-approved represent a degree of uncertainty for the seller so when you make an offer to purchase a property it will be treated as a priority because the seller knows that your offer will essentially result in a sure deal. This means that the seller can agree to your offer and get a guaranteed amount of money instead of wasting time on a potential offer associated with uncertainty of mortgage approval. If a buyer without a pre-approval is chosen, that buyer may not qualify for a loan in the amount that is needed so the sale would fall through and the seller would be right back where he started. Being pre-approved will automatically give your offer a lot more weight when it comes to negotiating with sellers and your odds of getting the house that you want will dramatically improve.

To get pre-approved, call me today at 416-674-2318 and let’s get started, or send me a quick email: garry.grewal@dominionlending.ca

Most home maintenance activities are seasonal. During winter months, it is important to follow routine maintenance procedures, by checking your home carefully for any problems arising and taking corrective action as soon as possible. These include:

• Check and clean or replace furnace air filters each month during the heating season. Ventilation system, such as heat recovery ventilator, filters should be checked every two months.
• After consulting your hot water tank owner’s manual, drain off a dishpan full of water from the clean-out valve at the bottom of your hot water tank to control sediment and maintain efficiency.
• Clean the humidifier two or three times during the winter season.
• Vacuum bathroom fan grilles.
• Vacuum fire and smoke detectors, as dust or spider webs can prevent them from functioning.
• Vacuum radiator grilles on back of refrigerators and freezers, and empty and clean drip trays.
• Check gauge on all fire extinguishers; recharge or replace if necessary.
• Check fire escape routes, door and window locks and hardware, and lighting around outside of house; ensure family has good security habits.
• Check the basement floor drain to ensure the trap contains water. Refill with water if necessary.
• Monitor your home for excessive moisture levels—for example, condensation on your windows, which can cause significant damage over time and pose serious health problems—and take corrective action.
• Check all faucets for signs of dripping and change washers as needed. Faucets requiring frequent replacement of washers may be in need of repair.
• If you have a plumbing fixture that is not used frequently, such as a laundry tub or spare bathroom sink, tub or shower stall, run some water briefly to keep water in the trap.
• Clean drains in dishwasher, sinks, bathtubs and shower stalls.
• Test plumbing shut-off valves to ensure they are working and to prevent them from seizing.
• Examine windows and doors for ice accumulation or cold air leaks. If found, make a note to repair or replace in the spring.
• Examine attic for frost accumulation. Check roof for ice dams or icicles. There shouldn’t be excessive frost or staining of the underside of the roof, or ice dams on the roof surface.
• Check electrical cords, plugs and outlets for all indoor and outdoor seasonal lights to ensure fire safety: if worn, or if plugs or cords feel warm to the touch, replace immediately.

The decision to choose a fixed or variable rate is not always an easy one. It should depend on your tolerance for risk as well as your ability to withstand increases in mortgage payments. You can sometimes expect a financial reward for going with the variable rate, although the precise magnitude will ebb and flow depending on the economic environment.

Fixed rate mortgages often appeal to clients who want stability in their payments, manage a tight monthly budget, or are generally more conservative. For example, young couples with large mortgages relative to their income might be better off opting for the peace of mind that a fixed-rate brings.

A variable rate mortgage often allows the borrower to take advantage of lower rates – the interest rate is calculated on an ongoing basis at a lenders’ prime rate minus a pre-determined percentage. For example, if the prime mortgage rate is 5.5 percent, the holder of a prime minus 0.5 percent mortgage would pay a 5.0 percent variable interest rate.

As a consumer, the best option is to have a candid discussion with your mortgage professional to ensure you have a full understanding of the risks and rewards of each type of mortgage. Call me today at 416-674-2318 and let’s get started.

Your income (capacity to repay) usually indicates how much money you can borrow, but your credit report (repayment history) will usually determine whether you can borrow additional money. Past credit behaviours are categorized into five predictive characteristics used by the credit bureau to determine your credit score.

Past Payment Performance (35%): Fewer late payments, judgments, liens or collections, are better. Recent late payments weigh more than those two years past.

Credit Utilization (30%): Low balances (at or below 30% of available credit limit) on a few cards are better than high balances on one or two cards. Several cards can be a detriment.

Credit History (15%): The longer accounts have been open and in good standing, the better. Avoid “credit surfing” – opening new accounts and closing established ones will negatively impact on a credit score.

Types of Credit in Use (10%): Traditional banking or retail accounts score higher than finance company accounts especially those that offer deferred payment options.

Previous Inquiries (10%): Seeking new credit over a short period of time can be associated with higher risk. Administrative inquiries by credit grantors do not affect the credit score.

How do you fare? Individuals may obtain a copy of their personal credit report from Equifax Canada Inc. or TransUnion Canada directly. Call me at 416-674-2318 to find out how to obtain a copy of your record.

Homeowners should know the differences between a conventional mortgage and a Home Equity Line Of Credit (HELOC).

A conventional mortgage is a registered charge against your home. There is a set term – 6 months to 10 years with a fixed or variable interest rate. Payments include principal and interest. Many homeowners choose a fixed rate as it is easier to set budgets knowing the interest rate won’t change during the chosen term. Variable interest rates will change as Prime rate changes. You can purchase a home with as little as 5% down payment. If you have less than a 20% down payment (equity) the maximum amortization is 25 years. With more than 20% down, a 30 or 35 year amortization is available.

A HELOC is a secured line of credit also registered as a charge against your home. This charge can be in first position but generally is added behind a conventional mortgage. Some lenders will not permit another charge on title. Like any line of credit, a HELOC is fully open and you can borrow, re-pay and re-borrow. The interest rate is tied to the Prime rate and may fluctuate. Canadian Government regulations stipulate that a HELOC cannot exceed 65% of the value of your home, unless in second position when combined with a mortgage, in which case you can borrow to 80% of the value and qualifying must be done on a 25 year amortization using the government regulated benchmark rate. Payments can be as low as interest only but that should truly be the never-never plan for repayment. Any spikes in interest rates can throw off the most dedicated budgeters!

If used responsibly and with a sound strategy, a HELOC can have many advantages. Purchasing investments with a HELOC creates a tax deduction for interest paid. Renovating your home with a HELOC allows you to draw from it when you need it, only paying interest on the money used. Your children’s education, buying a boat or the down payment for a recreation property can all be facilitated with a HELOC. A HELOC can be a great tool for investments, renovations and short term financing needs. For anything longer term, however, it is often cheaper to choose a conventional mortgage with a variable rate. The difference in the lower interest rate outweighs the flexibility of the HELOC.

When buying a home, most people take a conventional mortgage with a fixed term and rate. The astute homeowner understands the power of a conventional mortgage combined with a HELOC. Understanding your needs together with a strong financial strategy can quickly turn your largest debt into your greatest asset!

Bank representatives typically have only a few mortgage products available. Independent mortgage brokers have access to many lenders (various banks, credit unions, trust companies and private lenders) to help you put together the mortgage that works best for you!

Although almost everyone wants a mortgage with the best rates, terms and conditions possible, yet many people still take the mortgage product offered by their bank without shopping around. However, when dealing with a bank, you are only negotiating with one lender and only for their limited line-up of products. Even if you have been a long time customer of a bank, it does not mean you will be offered the best rate or product possible.

Long-held beliefs sometimes include the idea that mortgage brokers are only for people who have bad credit or were turned down by a bank. Unfortunately, anyone with this kind of outdated thinking could be losing thousands of dollars! All homebuyers and homeowners can save time and money by enlisting the services of a broker.

I have years of experience in the financial industry and know how to keep my clients happy. It starts with listening to them so as to better understand their situation and their needs. Not every borrower is the same and many face challenges. My financial background allows me to examine all available mortgage options to determine which one best suits a particular need. I

have access to many competing lending institutions, including banks, trust companies and even private individuals. Widespread access to lenders guarantees a completely unbiased recommendation every time with only the best interest of the client in mind. There are other potential cost savings. For example, a particular lender may have a special rate offer for a specific mortgage term. If you are rate-shopping on your own and don’t know who is sponsoring the offer, you can’t take advantage of the special pricing.

At mortgage renewal, many homeowners take the renewal quote and choose a term and rate offered by the lender without realizing that a mortgage broker may be able to save them up to one percentage point off the posted rate. This can translate into thousands of dollars in savings over a five-year term. To ensure you get the best rate, just call me at 416-674-2318 four months before you renew an existing mortgage or consider a new home purchase. Starting early can be a money saver because a broker can usually guarantee an interest rate for 90-120 days. Should rates drop in the meantime, you would of course get the lower rate.

If your credit rating is important to you, then you also need to consider that when you take it upon yourself to shop from lender to lender, there is an accumulation of inquires on your credit bureau report, affecting your credit rating and ultimately the rate and terms of your mortgage. This is not the case with me, since with a single inquiry I can obtain many competing lenders to quote on your business.

Finally, fees payable are an important misconception that should be clarified. Some people think that using a broker will be costly and that there will be an upfront fee. In most cases, there is no fee at all because the lender that provides the mortgage pays the broker’s fee for obtaining the business. As you would expect, a fee may be charged to clients with impaired credit or when private money is used, although this compensates for the time and effort required to negotiate the mortgage.

There’s good debt and bad debt and the difference lies in whether it helps or hurts the pursuit of our financial goals.

Some debt can be seen as assisting one’s financial future:

1. Borrowing money to maximize retirement savings.

2. Loans with tax-deductible interest to earn investment income.

3. Borrowing to acquire an asset that may increase in value, such as a home or a rental property.

4. Student loans that enable us to get an education and lay the foundation for a career.

However, other types of debt can be a drag on future opportunities:

1. Revolving consumer debt with high rates of interest, such as bank credit cards or retail store cards.

2. Borrowing funds to buy something that has little or no future financial value.

3. Cash advances on credit cards; interest is charged from the date of advance – there’s no grace period.

To get rid of your bad debt or to arrange good debt, please call me at 416-674-2318 or send me an email: garry.grewal@dominionlending.ca

1.   As many as 85 percent of all people in the USA use a mortgage broker and we are catching up quickly here in Canada.

2.   I shop on your behalf for the best rates and products from over 50 different Banks, Credit Unions and Trust Companies.

3.   My services are free to you because the bank pays me a finder’s fee. The industry is changing and banks now have to compete for business, so they value broker referrals. They spend millions of dollars operating their many branches, plus internal staffing and layers of management, so they can afford to compensate me while offering you deep discounts for the business we bring to them.

4.   Isn’t it time the Banks compete for your mortgage business? You wouldn’t get just one opinion from one doctor if your physical condition were in question, so why get just one opinion when your financial profile is going through the most significant transaction of your life?

5.   Your bank rarely provides the best rates and products. Most homeowners renew their mortgages automatically every four or five years, so they rarely receive the best available option. Since brokers send lenders millions of dollars of new business each month, they always offer us the deepest discounts which I pass on to you – whether you are purchasing, refinancing or renewing.

6.   Our application process is simple and quick. I’ll just take your information and send it electronically to the lenders that I feel are the best fit for your situation; I should have some feedback later that day or the next!

7.   One of my best benefits is I’m available on your terms! Isn’t it frustrating when a bank takes several days to get back to you, and then, if they decline you, you have to go through the whole process with another bank all over again.

8.   I check your credit bureau record only once and forward it to all the appropriate lender! Many people inadvertently disqualify themselves from getting the best rate when they are shopping for a mortgage. When multiple banks pull your credit bureau report, your “Beacon Score” drops, sometimes eliminating the chance for the best mortgage or a mortgage at all!

9.   There’s a mortgage product available for almost everyone now. When a person’s situation isn’t ideal, there’s usually a story about why; maybe they changed jobs, maybe they went through a divorce or another life altering event and their credit was affected. It is my job to tell your story to a suitable lender that will approve you.

10.  I sincerely appreciate your business and will do a great job so that you may confidently refer your family, friends and co-workers to me in the future! Has any bank employee ever told you that?!

11.  I am a certified Expert. Most bank employees are not Accredited Mortgage Professionals and only know about their own bank’s products. They do not know and cannot advise you to go to another lender where you can qualify. You wouldn’t go to your family physician if you needed a specialist! So deal with a mortgage expert specializing in mortgages from various lenders.

12.  I work for you, not the banks. I don’t get paid unless your mortgage is funded by a lender that provides you the product you need. I have no reason to get the lender to charge you more interest on your mortgage, because the higher the interest, the harder it is to get you qualified! Clearly I work in your best interest.

13.  Rate Protection. If the rates drop before you close you automatically get the lower rate and if rates go up you have the lower rate locked in. The last time you got pre-approved for a mortgage at a bank, did you get a commitment letter? Did they offer you rate protection like the one I can secure for you?

14.  I provide a Commitment Letter every time so you can relax and be confident your mortgage financing is in place!

15.  A mortgage through a broker is no longer a “last resort!” Actually we are becoming the first choice for knowledgeable borrowers.

For more information on how you can get the best mortgage for your specific needs, please call me at 416-674-2318 or send me an email: garry.grewal@dominionlending.ca

If you are looking for a new home, be sure to get pre-approved. With a mortgage pre-approval, a licensed mortgage professional like myself can do a complete verification prior to sending you shopping for a home, and with that done, the dollar figure you are going shopping with is actually what you can spend. We will know for certain what you can afford based on lender and insurer criteria, and what the payments on a specific mortgage will be.

You can lock-in an interest rate for anywhere from 60 to 120 days while you shop for your perfect home. By locking in an interest rate, you are guaranteed to get a mortgage for at least that rate or better. If interest rates drop, your locked-in rate will drop as well. However, if the interest rates go up, your locked-in interest rate will not, ensuring you get the best rate throughout the mortgage pre-approval process.

In order to get pre-approved for a mortgage, we require a short list of information that will allow your lender to determine your purchasing power. I will explain to you the benefits of shorter or longer mortgage terms, the latest programs available, which mortgage products will most likely meet your needs the best and review all of the other costs involved with purchasing a home.

Getting pre-approved for a mortgage is something every potential home buyer should do before going shopping for a home. A pre-approval will give you the confidence of knowing that financing is available, and it can put you in a very positive negotiation position against other home buyers who aren’t pre-approved.

To get pre-approved, call me today at 416-674-2318 and let’s get started, or send me a quick email: garry.grewal@dominionlending.ca

Purchasing a home is one of the biggest decisions most people ever make. At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.

Some Advantages of Buying a Home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.

Each month when you make your mortgage payment, you are building equity in your home. Equity is the portion of the property that you actually own through your monthly payment versus the portion that you still owe the lender.

At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate.

Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage) which, in turn, saves you money.

There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity for you. As you build equity and your family grows, it’s usually easier to upgrade to a larger home in the future thanks to the profit you’ll make when selling your current home.

As an owner, you can also modify and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community.

If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity which may allow you to buy the home of your dreams one day.

Since interest rates are low, now may be an ideal time to enter into home ownership for the first time.

Some Disadvantages of Buying a Home

Although it’s easy to get caught up in the excitement of buying a home, it’s important to remember that home ownership has some additional responsibilities as well.

For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, utility bills, repairs and general maintenance.

Owning a home ties up some of your cash flow and is likely to reduce your flexibility to move to a new location or change jobs.

While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees, legal expenses and moving, renovation and other selling costs.

Real estate is, however, usually considered a good investment over the long term.

When making the decision about whether to buy or rent, it’s important to carefully choose a home you can afford and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but ultimately it’s a personal decision based on your own priorities.

If you’re thinking of buying your first home, I’ll be glad to answer all of your mortgage-related questions. To get started, simply give me a call at 416-674-2318 or send me a quick email: garry.grewal@dominionlending.ca