2 Feb

Preparing to Rent out Your Property

Home Tips

Posted by: Matthew J. Charlton

Excluding property management services, you may prepare for and secure quality tenants either with the help of a Real Estate Representative or on your own:

1. Hire a Real Estate Representative: Realtors can add significant value to the overall leasing process including pricing, advertising, showing, screening, negotiating, and paperwork. The total cost is usually one month’s rent. If you don’t have the time or skills to find a great tenant, I’d be happy to introduce you to a Realtor partner that’s best suited for your specific location.

2. On Your Own: Many Landlords have successfully found tenants on Craigslist and Kijiji, though be prepared to plan, deal with administrative aspects (e.g., paperwork, agreements), and screen a random selection of prospective tenants. Be cautious — there are many sophisticated scams operating online. As with most things in life, if it seems too good to be true, it probably is. Viewit.ca is a great advertising site for Landlords. For a monthly subscription fee, your property will be showcased online to prospective tenants. If you prefer to take on the task yourself, read on and make sure you understand all the requirements to ensure you’re adhering to rules, regulations, and the screening process. Not doing so could be time-consuming and costly in the long run.


Renting out a property in Ontario can be exciting, but the process requires planning and careful thought whether this is your first rental property or you’re a seasoned landlord. From new laws to offering a standard lease, there are several aspects of being a landlord that you must keep top of mind. Rental property management is a business, which requires professionalism, financial prudence, and the ability to attract and screen potential tenants thoroughly before move-in day. Legal and financial considerations should be at the forefront of your actions.

Here are five steps you can follow to make the property rental experience much easier for yourself:

1. Prepare the Unit

Too many property owners don’t take enough time to prepare the unit for showings with prospective tenants. Make sure your prospects are impressed by what they see at your property! If your property has a yard or any landscaping, take the time to clean things up, mow the grass, pull weeds, and get rid of any branches or debris lying around. Invest in a thorough cleaning inside the unit and make necessary repairs. A simple coat of paint can go a very long way to freshen up a dull and dreary unit. The better your property shows, the greater the likelihood it will attract tenants who will appreciate and respect your investment and their home.

2. Do the Necessary Paperwork

Many property owners dread dealing with the paperwork or neglect it entirely, but it’s a crucial part of the rental process. You need to prepare application forms, lease agreements and additional forms that you might need later, including eviction notices. Since the laws and regulations governing tenant paperwork and documentation vary depending on the location of your rental, you should consult with a professional who is familiar with provincial guidelines.

3. Set Your Rental Price

Choosing the right price for your rental unit requires careful thought, research and consideration. Your rate should be enough to cover all unit expenses and still bring in a reasonable profit — but you don’t want to set sky-high rates that dissuade potential renters. Research rental units in your area similar to the one you’re listing on the market. A Realtor can help you determine what renters are willing to pay for units like yours — you’ll also ensure you’re getting a fair rate for your property rental. Request an introduction!

4. Focus on the Advertisement

The right ad can be the difference between an extended vacancy at your property and a unit that gets an overwhelming response as soon as it hits the market. Perfect your ad content, take high resolution photos, then use a variety of platforms to spread the word. Let your family and friends know about your vacancy, put a sign out in front of the property, list the rental on community bulletin boards, and use multiple property listing websites to ensure that you reach the prospective tenants that you are looking to attract to your property.

5. Meet with Prospective Tenants 

Once you’ve received responses from potential tenants, set up a time to meet prospects and give them a tour of the property. If you generate a lot of interest, you can have an open house so that several prospects have the opportunity to tour the space at once. Bring plenty of application forms to the showing so prospects can get started with the process after viewing the unit. If you have the time to do one-on-one showings, try to schedule them on the same day so you don’t have to visit the property multiple times over several days. Confirm appointment times directly with prospects to reduce the number of no-shows. Working with a Real Estate Representative offloads much of this process.

6. Carefully Select Your Tenants 

Screening potential tenants is an essential part of the rental process — you need reliable tenants. No matter what kind of impression a tenant makes when you initially meet them, take the necessary steps to thoroughly vet them. Your property management experience and your net return are highly dependent on the quality of tenants you have on your property. However, legal mistakes during the screening process can result in unintended consequences.

First, review the tenant applications that you receive to look for any red flags. Pay attention to a prospect’s rental history and employment background, since these factors will inform whether a tenant is reliable and able to meet rental obligations.

After evaluating the rental application, run a credit check to verify the information a tenant provides on their application. Consider joining the Ontario Landlords Association to access valuable resources and premium credit check services.

Next, reach out to a prospect’s references to find out more about them and whether they will be reliable tenants.

Nobody wants to miss out on potential profits, so it can be tempting to fill your open rental as quickly as possible with the first prospect who applies. Unfortunately, this approach is likely to result in more trouble than it’s worth. By taking the time and effort to find a reliable tenant, you’ll enjoy long-term benefits and avoid the headaches of a problematic renter.


Here are a few helpful tips for attaining the most favourable results:

Tip #1. Insist on an in-person or virtual interview before offering a lease agreement

Tip #2. Ask essential questions as you show the unit to prospective tenants

Tip #3. Gather all relevant details on your rental application

Tip #4. Obtain a prospective tenant’s written consent for due diligence checks

Tip #5. Perform due diligence by authenticating references and feedback

Tip #6. Ensure that your screening process does not violate local rules

If a rental applicant is not a good fit, trust your instincts and do not let them rent your space. You can also consult with a residential Real Estate Lawyer to help you navigate the legalities of tenant screening and audit whether your process complies with local rules and regulations. I’d be happy to introduce you to a qualified Real Estate Lawyer.


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1 Feb

Buying a Rental Property

Buying Property

Posted by: Matthew J. Charlton

You might be surprised to learn that you don’t need to be one of the uber rich or make six figures to have a second property. You just need to have knowledge, determination and financial planning!

If you are purchasing a secondary property with the intention to rent, here are a few extra things to know:

1. The minimum downpayment required is 20% of the purchase price, and the funds must come from your own savings – you cannot use a gift from someone else.

2. Only a portion of the rental income can be used for qualifying and determining how much you can afford to borrow. Some lenders will only allow you to use 50% of the income added to yours, while other lenders may allow up to 80% of the rental income while subtracting your expenses. This can have a much higher impact on how much you can afford.

3. Interest rates typically have a premium on them when the mortgage is for a rental property versus a mortgage for a home you intend on living in. The premium can be anywhere from 0.10% to 0.20% on a regular 5-year fixed rate.

4. If you do eventually want to sell this property, do note that it will be subject to capital gains tax. Your accountant will be able to help you with that aspect if you do decide to sell in the future.


Prior to taking on a secondary property, you will need to have your downpayment in order (whether from savings or home equity) based on the minimum requirements, and you must also have a sufficient credit score to qualify. In addition to the downpayment, you will need to pass the stress-test and prove that you can financially carry your existing mortgage and the new mortgage loan.

If you are looking to purchase a rental property, let’s talk before you start. I would love to help review your financial situation, current mortgage and equity, and help you make a plan. The keys to success are right around the corner with a little bit of expert advice!


Recommended reading:


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19 Jan

Pantone of the Year 2022

General

Posted by: Matthew J. Charlton

The Pantone Color Institute has published their 2022 Pantone trends with Spring and Summer colours that reflect our aspiration for balance. These colours highlight our need for clarity, security and comfort allowing us to satisfy our urges to remain with what is familiar. In addition, these colours bring together a balance of joyful adventure through soothing and timeless hues.

Some of the more distinctive tones for early 2022 blend colour and familiarity with the unexpected and include pastel blues and pinks, along with vibrant roses, blues and yellows paired with soft mochas and teals. These are balanced with classic beiges, whites and greens for a balanced palette with a splash of colour and excitement!

If you’re looking for ideas on how to incorporate this year’s Pantone palette, some easy options include: adding a fresh coat of paint to your bedroom or living space, spicing up your furniture with new throw pillows or reupholstering your sofa and seating area to add a splash of freshness! You can also consider reviving your curtains with new tones or swapping out your rug to add in powerful accent hues.


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8 Jan

Improving Your Financial Direction

General

Posted by: Matthew J. Charlton

Make 2022 the year of finance by improving your financial direction from the start!

Even if you are living paycheque-to-paycheque, a few changes to the way you spend and look at money can make all the difference. It’s never too late to start again and reverse course! Here are a few simple ideas to get you started:

  • Create a Budget: In order to stop living paycheque-to-paycheque, you need to know where that paycheque is going. Creating a budget is simple with Google docs, or look into other online tools and sites to get started. Check out this post for an in-depth look at budgeting! 
     
  • Pretend You Earn Less Than You Do: Give yourself a cut in pay. The goal is to put 10% in savings from each paycheque into your savings account. The easiest way is to do an automatic direct transfer from your chequing account to your savings every pay period.
     
  • Pay Down Debt: If you have a lot of credit card or unsecured debt, try paying the minimum on all but one of them and aggressively pay down that one card. Once it’s paid off, attack the next one. If you’re so deep in debt that you can’t fight your way out, consider consulting with myself or your financial advisor about your debt consolidation options and if your mortgage can be used to help you clean the slate. We will be able to review your debt and possibly recommend a way to consolidate it into one simple payment with a single point of interest charge.
     
  • Build an Emergency Fund: Once you have your budget in place, review it and break it down into non-discretionary expenses (rent, groceries, utilities, etc.) and discretionary expenses (eating out, entertainment, clothes, etc.). See where you can cut down on discretionary spending and put that money towards your emergency fund. Even starting with just a little amount is great and helps you build the habit of saving.
     
  • Don’t Forget Your Future: Putting at least 3% of your paycheque into a retirement fund is a great idea, or maybe when you get your first raise instead of thinking of it as free money, simply put it into a fund and forget about it. You’ll be glad it’s there when you need it in the future.
     
  • Consider Downsizing: It may be time to consider a lifestyle change. Consider moving to a smaller place. Get rid of the cost of going to that expensive gym with a trip to the local park. Think about if you really need that brand new car or if a used one would work just as well.

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16 Dec

Selling Your Home in Winter

Lifestyle

Posted by: Matthew J. Charlton

While you might think selling your home in winter is harder, with the right considerations it doesn’t have to be! When selling your home during warmer months, the focus is typically on curb appeal and gardening, as well as having bright colours and patterns to draw out different rooms.

While curb appeal should not be forgotten in winter months, the focus should be centred on creating a warm, comfortable and welcoming space. You can do this through the following:

  1. Curb AppealIf you live in an area that receives high amounts of snow, be diligent about keeping your sidewalk and driveways clear for visitors, and to keep your home looking clean for viewing. Always make sure to sweep any fallen leaves or debris.
  2. Keep it CozyEnsuring your home is sufficiently heated during showings will also go a long way to making it feel more comfortable; a steady 68 to 70 degrees Fahrenheit during showings is ideal.
  3. Light and InvitingWith days being shorter and darker during winter, ensuring your home is light and inviting can make a big difference. In some cases, you may consider repainting the walls before listing your property.
  4. DeclutterWhen selling, it is important to declutter your home so that it looks its best and gives room for people to imagine their own belongings in your space.
  5. Define Property BoundariesIf you are showing your home in the middle of snow season, be sure to mark the four corners of your property so that potential buyers can see exactly what they are getting.

While there is some extra work with selling your home in the winter due to the weather conditions, it can pay off! Buyers tend to be highly motivated and often there is less competition for sales during this time giving more focus to your home.


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10 Dec

Mortgages for the Self-Employed

Mortgage Tips

Posted by: Matthew J. Charlton

Did you know? Approximately 15%+ of Canadians are self-employed, making this an important segment in the mortgage and financing space. When it comes to self-employed individuals seeking a mortgage, there are some key things to note as this process can differ from the standard mortgage.

For self-employed individuals with an established business seeking best rate financing, the business must have a minimum of two years of history. This includes self-employed applicants who own a full or part-time business and covers sole proprietorships, incorporations, and partnerships.

In order to obtain a mortgage when self-employed, most lenders require Revenue Canada personal tax Notices of Assessment and respective T1 Generals be included with the mortgage application for the most recent two years. Typically, individuals who can provide these documents – with acceptable income levels – should have little issue obtaining a mortgage product and rates available to the traditional borrower.

One primary benefit of being self-employed is the privilege of writing your income down. You enjoy less tax because you get to write-off expenses, but you lose borrowing power. It is important to be aware of this because you can either pay less tax or have more borrowing power.

As a self-employed individual, you will fall into one of the following three categories:

1. You can provide the tax documents and you have a high enough income, so there aren’t any initial impediments to your application.

2. You can provide the Revenue Canada documents, but don’t have enough stated income due to write-offs. In this case, you need a minimum of 10% down with standard interest rates. If you put down less than 20% down payment when relying on stated income, the default insurance premiums are higher.

3. You cannot provide the Revenue Canada documents, which means you will be required to put down 20% and may have higher interest rates.

For a typical borrower, lenders often require a letter of employment and recent pay stubs to confirm and calculate income. When it comes to calculating income for a self-employed application, lenders will either take an average of two years’ income or your most recent annual income if it’s lower.

When it comes to submitting your mortgage application, you will need to provide the standard documentation in addition to the following:

  • For incorporated businesses – two years of accountant prepared financial statements (Income Statement and Balance Sheet)
  • Two most recent years of Personal NOAs (Notice of Assessments) and tax returns
  • Potentially 6-12 months of business bank statements
  • Confirmation that HST/Source Deductions are current

If you’re self-employed and looking to qualify for a mortgage, or simply have some questions for when you are ready in the future, please don’t hesitate to reach out today! I would be happy to work with you to ensure you have the necessary documentation, understand your options and can obtain a pre-approval to help you understand how much you qualify for!


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1 Nov

Mortgage prep, Mortgage mistakes, Staging tips and More! – November 2021

General

Posted by: Matthew J. Charlton

NOVEMBER 2021

Hello!

In this issue:


7 Steps for Mortgage Prep

Step 1 – Your Credit Score
Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 or greater for at least one borrower (or guarantor), especially if you are putting less than 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.

If your credit score does not meet the minimum requirements, there are a number of things you can do to improve it and your future financial success, including:

  • Paying your bills in full and on time. If you cannot afford the full amount, try paying at least the minimum required.
  • Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible.
  • Stay within the limit on your credit cards and try to keep your balances as low as possible.
  • Reduce the number of credit card or loan applications you submit.
  • Considering an Alternative Lender (or B Lender) if you are struggling with credit issues.

I can help review your credit score and provide you with options for your mortgage needs.

Step 2 – Your Budget
When considering your budget, it is important to look at the purchase price budget, as well as your cash flow budget. Being house rich and cash poor makes for a no-fun home! The home price based on your cash flow budget may be dramatically different from the budget home price you qualify for. Not only does having a budget help you to understand your purchase price range and help you to find an affordable home, but it can also help you to see any gaps or opportunities for future savings. This will be instrumental when you become responsible for mortgage payments.

Step 3 – Your Down Payment
The ideal down payment for purchasing a home is 20%. However, we understand in today’s market that is not always possible. Therefore, it is important to note that any potential home buyer with less than a 20% down payment MUST purchase default insurance on the mortgage, and they must have a minimum down payment of 5%.

The down payment on your home could come from your own savings such as a savings account or RRSPs. Thanks to the federal government’s Home Buyers’ Plan, potential first-time home owners are able to leverage up to $35,000 of your RRSP savings ($70,000 for a couple) to help finance the down payment. A gift of a down payment from an immediate relative is also acceptable. If your down payment comes from TFSA or RRSP, the bank will want 90 days of statements to ensure the funds are accounted for. Gifted funds rarely require 90 days of proof.

Step 4 – Your Mortgage Options
Rate is only ONE of the many features in selecting the best mortgage product that meets your financial goals. With access to over 118 lending institutions, I am familiar with a variety of mortgage products to help you find the best mortgage for YOU! Plus, unlike banks, I am independent, licensed and focused on YOUR needs. This means that you can get the best rates and unbiased advice all for FREE while helping you advance major life goals.

Step 5 – Your Paperwork
When you apply for a mortgage, you will typically need to provide a standard package of documents, which almost always includes:

  • Your valid government-issued personal identification
  • One month of recent pay stubs from applicants who will be listed on the loan
  • Letter of employment
  • Your most recent two years’ worth of personal CRA tax filings and financials (if incorporated)
  • Three months of bank account statements
  • Proof of your down payment (minimum 5%)
  • Documentation to explain any unusual (generally non-payroll) large deposits or withdrawals

Step 6 – Your Pre-Approval
To have the best success with your mortgage, it is recommended that you get pre-approved! This is done through me to ensure that you get the best mortgage product FOR YOU, from the best rate to the best term agreement. A Pre-approval helps verify your budget and allows your real estate agent to find the best home in your price range.

  1. Pre-approval guarantees the rate offered and locks it in for up to 120 days. This protects you from any increases in interest rates while you are shopping (phew!).
  2. Pre-approval lets the seller know that securing financing should not be an issue, which is beneficial in competitive markets!

Quick Tip: Don’t forget about the closing costs! These range from 1 to 4% of the purchase price and should be factored into your budget.

Step 7 – You’re Ready to Shop
You made it!! Once you have your down payment and have qualified for a pre-approved mortgage (your credit score is in order and all documentation has been provided), you are ready to start searching for your perfect home. If you’re stuck, I would be happy to give you recommendations for a realtor, if you don’t have one already.

Get in touch today and request a copy of my Homebuyers Guide!


10 Mortgage Mistakes

Whether it is your first house or you’re moving to a new neighbourhood, getting approved for a mortgage is exciting! However, even if you have been approved and are simply waiting to close, there are still some things to keep in mind to ensure your efforts are successful.

Many homeowners believe that if you have been approved for a mortgage, you are good to go. However, your lender or mortgage insurance provider will often run a final credit report before completion to ensure that nothing has changed. Changes in your credit usage and score could affect what you qualify for – or whether or not you get your mortgage at all.

To avoid having your mortgage approval status reversed or jeopardizing your financing, be sure to stay away from these 10 mortgage mistakes:

1. FALSIFY YOUR APPLICATION

Do not misrepresent your financials; you must be honest on your mortgage application. This is especially true when working together to secure your financing, as my main goal is to assist you in your home buying journey. Providing accurate information surrounding your income, properties owned, debts, assets and your financial past is critical. If you have been through a foreclosure, bankruptcy or consumer proposal, disclose this right away as well. I am here to help!

2. GETTING PRE-APPROVED

With all the changes and qualifying requirements surrounding mortgages, it is a mistake to assume that you will be approved. Many things can influence whether or not you qualify for financing such as unknown changes to your credit report, mortgage product updates or rate changes. Getting pre-approved is the first step to ensuring you are on the right track and securing that mortgage! Most banks consider a pre-approval to be valid for four months (120 days). So, even if you aren’t house-hunting tomorrow, getting pre-approved (and securing a rate-hold) NOW will come in handy if a new home is in your near future.

3. SHOPPING AROUND

One of the biggest mistakes people make when looking to secure a mortgage is not shopping around. It is easy to simply sign up with your existing bank, but you could be paying thousands more than you need to, without even knowing it! This is where I can help! With access to over 118 lenders and financial institutions, I can help you find a mortgage with the best rate and terms to suit YOUR needs.

4. NOT SAVING FOR A DOWN PAYMENT

Your down payment is a critical part of homeownership and a useful financial tool that you should utilize when purchasing a home. A down payment reduces the overall amount of financing you need and increases the amount of equity right from the start. Down payments also show the bank you are serious. In Canada, the minimum down payment is 5% (with mortgage insurance), with the recommended down payment being 20% if possible.

5. CHANGING EMPLOYERS OR JOBS        

As employment is one of the most important factors that determines whether or not you qualify for financing, it is important not to change employers if you are in the middle of the approval process. Banks prefer to see a long tenure with your employer, as it indicates financial stability. It is best to wait for any major career changes until after your mortgage has been approved and you have the keys to your new home!

6. APPLYING OR CO-SIGNING FOR OTHER LOANS

Applying for additional loans or financing while you are currently in the midst of finalizing a mortgage contract can drastically affect what you qualify for – it can even jeopardize your credit rating! Save any big purchases, such as a new car, until after your mortgage has been finalized.

Also, just as applying for new loans can wreak havoc on a mortgage application, so can co-signing for other loans. Co-signing signifies that you can handle the full responsibility of the debt if the other individual defaults. As a result, this will show up on your credit report and can become a liability on your application, potentially lowering your borrowing power.

7. AVOIDING CREDIT MISSTEPS

As mortgage financing is contingent on your credit score and your current debt, it is important to keep these things healthy during the course of mortgage approval. Do not go over any limits on your cards or lines of credit, or miss any payment dates during the time your finances are being reviewed. This will affect whether or not the lender sees you as a responsible borrower.

Also, although you might think an application with less debt available to use would be something a bank would favor, credit scores actually increase the longer a card is open and in good standing. Having unused available credit and cards open for a long duration with a good history of repayment is a good thing! In fact, if you lower the level of your available credit (especially in the midst of an application) it could lower your credit score.

8. HAVING TOO MUCH DEBT

Credit card debt is on the rise and overuse of lines of credit can put you at risk for debt overload. Large purchases such as new truck or boat can push your total debt servicing ratio over the limit (how much you owe versus how much you make), making it impossible to receive financing. Some homeowners have so much consumer debt that they aren’t even able to refinance their home to consolidate that debt. Before you start considering a new home, make sure your current debt is under control.

9. LARGE DEPOSITS

Just as now is not the time for new loans, it is also not the time for large deposits or “mattress money” to come into your account. The bank requires a three-month history of all down payments and funds for the mortgage when purchasing property. Any deposits outside of your employment or pension income will need to be verified with a paper trail – such as a bill of sale for a vehicle, or income tax credit receipts. Unexplained deposits can delay your mortgage financing, or put it in jeopardy if they cannot be explained.

10. MARRYING INTO POOR CREDIT

Having the financial talk before getting hitched continues to be critical for your financial future. Your partner’s credit can affect your ability to get approved for a mortgage. If there are unexpected financial issues with your partner’s credit history, make sure to have a discussion with me before you start shopping for a new home.

If you are currently in the midst of a mortgage application, or are looking to start the process, don’t hesitate to reach out to me directly today to ensure that you do things the RIGHT way to succeed with your home purchase.


5 Tips for Staging Your Home Yourself

Getting a home ready for sale or lease is a big job on its own. For some, the thought of staging your home may be overwhelming. Realtors may offer this service as part of their package, but if not, don’t worry, it’s easy to do it yourself with a little inspiration. Beyond the basic advice of the 3 D’s: depersonalize, declutter and decorate, there’s a lot more that can be done to get your desired outcome. Selling your home depends on many factors. Most importantly, it relies on the feeling it exudes when a potential buyer walks through the door. If you’re ready to move on quickly and for top dollar, consider some of these DIY home staging tips.

Your staging efforts will determine the experience buyers get when touring your house. The goal is to make them feel welcomed and at ease, starting with the exterior of the house. The right place gives prospective purchasers a positive feeling, somewhere they could see many joyous days.

1. Use your resources

Can you think of an interior designer or realtor within your network? Invite them over to view the home in person and pick their brain a bit. They may be able to direct you to local businesses that offer furniture rentals or moving companies. Feng shui consultants are a good option to consider as well.

Emerging from ancient China, Feng shui is a traditional method also known as Chinese geomancy which is very popular in home staging. It claims to harmonize individuals by using the energy forces of their surrounding environment. By incorporating different elements in individual directions within your home, you may be inviting prosperity inside.

Get in touch! I’d be happy to introduce you to a Realtor partner.

2. Revive your rooms

Take a true and critical look at your place, does the kitchen scream “drab”? Are there stains on the upholstery? Does the bathroom look worn out? Freshening things up can make a place look new.

If your kitchen cabinets seem to darken up the room, consider painting them. Decide if you’d want them all one colour or different for the top and lower cabinets. Getting creative with the colour combination is one way of attracting buyers, however something too bold could turn some away. A clean slate is a great start, sparkle it up a bit with new hardware for the finishing touch. Doing this yourself can save lots of money as opposed to replacing the cabinets.

Do your existing rugs and window treatments pass the cleanliness check? If they are soiled or tattered it’s best to get them cleaned, repaired or replaced altogether. Go take a look around the sinks and tiles. Reapplying grout on tiles and caulk along sinks and windows makes it look so fresh and so clean.

3. Edit your layout

Perhaps there is too much furniture that’s accumulated in the house throughout the years, making the space seem small and crowded. Consider donating, selling or storing larger items you want to keep for another day. Work with virtual room planners to help you better visualize the best possible placement for current furniture or future purchases.
Let the homes’ unique characteristics do the talking. Is there leaded glass in the living room or vaulted ceilings in the entryway? Keep the curtains pulled back to showcase your gorgeous windows and use decor that accentuates the height in the room. A fresh coat of paint in a warm yet neutral colour can work like magic.

4. Boost your appeal

Ensure the entryway of the home is clean and has a nice doormat, if it’s on the larger side, a pair of outdoor chairs and side table would come in handy here. Sometimes using the senses works too, make sure the property smells nice but not overly fragrant. Before someone agrees to purchase your house they must first envision themselves living there. While staging, try to showcase all of the possible amenities that the house can provide. Maybe it’s a nursery set up in a small bedroom or a multipurpose bedroom with work from home desk combination. Give viewers of the home options of what they could use the square footage for. Does your house have an awkward empty space? Create a designated “drop zone” for day-to-day things like keys, mail and device charging.

5. Accentuate your aesthetic

Do you want your home to make a statement? While the safe and neutral choices for paint schemes are welcomed, so are splashes of colour in accessories. Bold hues in accent furniture or throw blankets gives the potential buyer ideas of how they’d possibly decorate. Think of a theme, nautical for example, and roll with it for select items throughout the home. This is the time to get creative with artwork as well. Rooms with pops of blue, lanterns scattered or an overall coastal vibe will stand apart from boring beige places.

On the other hand, unless you’re looking to only sell to a specific demographic, it’s best to avoid overly themed staging. Test your styling limits by mixing metallics and materials. An office space with fabric chairs can be styled with a clean rug and nice lamp. The idea is to mix and match textures, colours, patterns and light until it feels just right.

Staged to sell

Home staging is an exercise in clearing away personal clutter, making your house feel like a home for someone else, all while trying to get the best possible return on investment. Reevaluating what is important with every possession you have can result in a renewed sense of self. Letting go of things that no longer serve you and likely won’t serve others can be freeing and purposeful at the same time.

Good luck on your journey!


Economic Insights with Dr. Sherry Cooper

Read recent insights here!


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1 Oct

Credit score tips, Why invest in a home inspection, Seasonal home preparation tips and More! – October 2021

General

Posted by: Matthew J. Charlton

OCTOBER 2021

Hello!

In this issue:


Get Better Credit With The 5 C’s

Buying your first home is an incredible step in life, but it is not without its hurdles! One of which is demonstrating that you are creditworthy, which all comes down to your ability to manage credit. This is how lenders and credit agencies determine the interest rate you pay. A higher credit rating could mean a lower interest rate and save you thousands of dollars over the life of your mortgage.

There are several attributes that lenders consider before granting credit, and these are commonly referred to as the “Five C’s” and consist of: Character, Capacity, Capital, Collateral and Conditions. Let’s take a closer look at each:

Character: The first C focused on YOU and your personal habits, which comes down to whether or not it is in your nature to pay debts on time. The determining factors for your credit character include the following:

  • Whether you habitually pay your bills on time
  • Whether you have any delinquent accounts
  • Your total outstanding debt
  • How you use your available credit:
    • Quick Tip: Using all or most of your available credit is not advised. It is better to increase your credit limit versus utilizing more than 70% of what is available each month. For instance, if you have a limit of $1000 on your credit card, you should never go over $700.
    • If you need to increase your score faster, a good place to start is using less than 30% of your credit limit.
    • If you need to use more, pay off your credit cards early so you do not go above 30% of your credit limit.

Capacity: The second component relating to your credit rating is your capacity. This refers to your ability to pay back the loan and factors in your cash flow versus your debt outstanding, as well as your employment history.

  • How long have you been with your current employer?
  • If you are self-employed, for how long?

Don’t be confused as capacity is not what YOU think you can afford; it is what the LENDER has determined that you can afford depending on your debt service ratio. This ratio is used by lenders to take your total monthly debt payments divided by your gross monthly income to determine whether or not you are able to pay back the loan.

Capital: Capital is the amount of money that a borrower puts towards a potential loan. In the case of mortgages, the starting capital is your down payment. A larger contribution often results in better rates and, in some cases, better mortgage terms. For instance, a mortgage with a down payment of 20% does not require default insurance, which is an added cost. When considering this component, it is a good idea to look at how much you have saved and where your down payment funds will be coming from. Is it a savings account? RRSPs? Or maybe it is a gift from an immediate family member.

Collateral: Collateral is what is pledged against a loan for security of repayment. In the case of auto loans, the loan is typically secured by the vehicle itself as the vehicle would be repossessed and re-sold in the event that the loan is defaulted on. In the case of mortgages, lenders typically consider the value of the property you are purchasing and other assets. They want to see a positive net worth; a negative net worth may result in being denied for a mortgage. Overall, loans with collateral backing are typically more secure and generally result in lower interest rates and better terms.

Conditions: The conditions of the loan can also influence the lender’s desire to provide financing. Conditions can include: interest rate, terms, length of loan and amount of principle needed. Typically lenders are more likely to approve specific-loans, such as a car loan or home improvement loan or mortgage as these have a specific purpose, as opposed to a signature loan.

There is no better time than now to recognize the importance of your credit score and check if you are on track with the Five C’s and your debt habits. A misstep in any one of these areas could be detrimental to your efforts to get a mortgage. If you are not sure or want more information, please don’t hesitate to reach out to me today to determine your current credit score and if there are areas for improvement to help you get a better interest rate and mortgage.


Why Invest in a Home Inspection

While home inspections might not be the most exciting part of your home buying journey, they are extremely important and can save you money and a major headache in the long run.

In a competitive housing market, there can sometimes be pressure to make an offer right away without conditions. However, no matter how competitive a market may be, you should never skip out on things designed for buyer protection – such as a home inspection.

You may have a good eye for décor and love the layout of your potential new home, but what is under the surface is typically where headaches can lie. We have all heard the expression “don’t judge a book by its cover” so why would you make the most important purchase in your life without checking it out?

In fact, there are five reasons that a home inspection might just be the best $300-$500 you ever spend:

  1. It Provides an “Out”: When buying a new house, it is always best to avoid taking chances. While a house may look great on the surface, hidden structural issues such as cracked foundation or roof damage can easily turn into expensive repairs. A home inspection can help reveal any large and/or hidden issues, which can often provide an ‘out’ for the buyer. If you find something that will cost a considerable amount to replace or repair you can go back to the seller’s agent and ask for a reduction in the price. A leaky roof may cost a few thousand to replace. Perhaps the seller would split the cost with you? It’s worth asking. If the price cannot be re-negotiated if issues come to light, then it is best to just walk away on the basis that the home will cost you too much in the long run.
  2. Confirms Safety and Structural Integrity: Another benefit of having a home inspection is not only to find issues, but also to confirm structural integrity. During an inspection, the inspector will review everything from the attic to the furthest reaches of the basement and will look for things like mold, holes in the chimney, saggy beams or improper wiring.
  3. Reveal Illegal Additions or Installations: Similarly to determining any safety and structural issues, home inspections can also reveal hidden additions or DIY installations that may cause trouble down the road. If the seller wired the house improperly or used substandard materials, it not only could cost you big in the future but it could even null and void your home insurance should something happen!
  4. Forecast Future Costs: A home is an ongoing expense, much like a car. Unless it is brand new, there will be regular maintenance and updates required to replace things when they become old and inefficient. For instance, water heaters typically last for 6-10 years, the life of a good roof is around 20 years, while furnaces can last up to 25 years. The home inspection report will include an estimate on the remaining life for each of these big-ticket items, which will give you a heads up on future expected costs and provide you time to save for their eventual replacement.
  5. Peace of Mind: Finally and perhaps most importantly, getting a home inspection is important for your own peace of mind. A home is a huge investment, and one that you will be paying off for 20 or 30 years. It is much easier to feel good about your investment after you have gone through a home inspection and you know that the house is safe and that you won’t run into any surprise problems down the road. While a home inspection isn’t free, peace of mind is priceless and a few hundred bucks is worth it!

If you’re not sure how to get started with your home inspection, please don’t hesitate to reach out to me directly for some help or a few referrals!


Fall Home Tips!

It is hard to believe it is October already! Even though Fall has already started, there are a few things you can do still to ensure your home is well-prepared for the season:

  • Inspect Your Gutters: This time of year it is important to clean and inspect your gutters (replacing as needed) to ensure they are working properly as the rain and snow season hits. If they are clogged or damaged, it could result in a flooded interior and damaged exterior so don’t wait!
  • Check for Drafts: In the Fall and Winter, many homeowners are spending extra money heating their homes due to drafts, but it doesn’t have to be that way! Do a check on all exterior doors and windows to confirm if they are properly sealed. To do this, simply close a door or window on a strip of paper. If the paper slides easily, you need to update your weatherstripping.
  • Have Your Furnace Inspected: In Canada we are no strangers to chilly evenings! To ensure you are comfortable throughout the colder months, be sure to have your furnace inspected by an HVAC professional. They can check leaks, test efficiency, and change the filter. They can also conduct a carbon monoxide check to ensure air safety.
  • Fix Any Concrete/Asphalt Cracks: This one is easy to ignore thinking it will be fine, but it could easily turn into a bigger issue. When water gets into existing cracks during the colder months it will freeze and expand, causing the crack to become even larger.
  • Turn Off Outdoor Plumbing: Since your garden will not need attention until the Spring, it is a good idea to shut off and drain all outdoor faucets and sprinkler systems. Depending on where you live, you might also want to cover them to prevent freezing during the Winter months.
  • Change Your Batteries: It is a good idea annually to check that all smoke detectors and carbon monoxide devices are working. While you’re doing your Fall and Winter home preparations, this is a good time to test your existing gadgets.

Economic Insights with Dr. Sherry Cooper

Read recent insights here!


What Not To Say When The ‘Bank’ Calls

If there’s one thing we’ve learned as technology marches forward—from phone calls to email and text—it’s that fraudsters will always find inventive ways to keep up.

But even as we move to more sophisticated means of communication and security, there are still some basic things that posers do when it comes to bank fraud—and many are summed up in this short article and handy infographic.

For instance, fraudulent emails often arrive dressed in your bank’s brand colours and logo asking for account numbers and PINs or birthdates. It’s easy to think these queries are legit—you might even recall discussing this information with your bank at some point. But here’s the key difference: it was probably when you called them. Your bank would not reach out to you to verify these things.

Source: Bridgewater Bank

 

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1 Sep

5 Approval Roadblocks

Mortgage Tips

Posted by: Matthew J. Charlton

5 Approval Roadblocks You Should Know

When buying a home, there is nothing worse than having your mortgage broker or lawyer call and say “there is a problem”. If you have found your dream home and negotiated a fair price, and you have supplied all the documentation to your broker, you probably assume everything is fine.

The reality is that your financing approval is based on the information the lender was provided at the time of the application. If there have been any changes to your financial situation, the lender is within their rights to cancel your mortgage approval. To ensure that you don’t encounter any last-minute roadblocks on your home buying journey, there are five major things you must avoid for a smooth transaction:

1. Changes to Your Employment
When submitting a request for financing, whether for a mortgage or car loan or to handle personal debt, one of the most important aspects the lender looks at is employment. If you were working at Company X for five years at $80,000 a year and change jobs before your upcoming mortgage is finalized, the lender will require proof from your new employer. If you change industries, they will need more proof that you are capable of keeping the job. Plus, for employment involving overtime or bonuses, the lender often requests a two-year average, which is not possible from a new position. Another employment change that could hurt your financing approval would be moving from an employee to a self-employed contractor. A good rule of thumb is to wait to make any major employment or life changes until after the deal has gone through.

2. Down Payment Source
As mortgage financing is based on the initial information provided, you will most likely need to do a final verification of the down payment source. If it is different from what the lender has approved, it could spell trouble for your financing approval. Even if you said that your down payment was coming from savings and, at the last minute, mom and dad offer you the funds as a gift, it could affect your approval. This is an acceptable source of down payment, but only if the lender knows about it in advance and has included this in their risk assessment.

3. Existing Debt
A week or two before your possession date, the lender will obtain a copy of your credit report and look for any changes to your debt load. Since mortgage approval is based on how much you owed on that particular date, it is important not to increase your debt before the deal is finalized. Buying a new car or items for the new home must be postponed until after possession; even if they are “do not pay for 12 months” campaigns because you will need to fulfil those payments, regardless of when they start.

4. Bad Credit
One of the biggest roadblocks to mortgage approvals is credit card payments. When you are in the process of getting financing or waiting to take possession of your home, it is important that your credit score remains positive. If your credit score falls due to late payments, this can cause major issues with your financing. Even if you have a high ratio mortgage in place which requires CMHC insurance, a lower credit score could mean a withdrawal of the insurance and removal of any financing approval.

5. Missing Identity Documents
Before a mortgage is finalized, the lawyer is required to verify your identity documents and see that they match the mortgage documents therefore it is important to use your legal name when you apply for a mortgage. Even if you go by your middle name or a nickname, all legal documents should match.

To help avoid last minute roadblocks and catastrophes with your mortgage application, be sure to keep in touch with me at all times during the mortgage process. If there are any changes from your initial mortgage application, it is important to advise them well in advance and to run those changes by me to ensure they will not affect your application. Get in touch!

 

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1 Jul

Changes to the stress test, Common first-time homeowner mistakes & Canadian Jobs Market – July 2021

General

Posted by: Matthew J. Charlton

JULY 2021

Hello!

In this issue:

  • The changes to the stress test rules put in place last month
  • All you need to know to avoid common first-time homeowner mistakes
  • Economic Insights with Dr. Sherry Cooper

Changes to the Stress Test and What You Need to Know

As you may have heard, the Bank of Canada recently changed the stress test rules as of June 1, 2021. With these changes, now both insured and uninsured mortgage borrowers will be subject to a stricter stress test when qualifying for their mortgage.

The new qualifying rate on uninsured mortgages – where the down payment is 20% or more – is now the contracted rate plus two percentage points or 5.25%, whichever is higher.

This means that any buyer whose down payment on a home is one-fifth of the purchase price or higher must show they can afford the mortgage payments if the interest rate was two percentage points higher than what the bank is offering, or the new five-year benchmark rate per the Bank of Canada.

Overall, the implementation of these tougher stress test rules will reduce buying power by roughly 4-5% for borrowers. To help illustrate  how this change affects you, consider the following scenario with $100,000 gross income:

The previous stress test at 4.79% would give this individual the ability to borrow $469,530 (based on good credit score with max GDS/TDS qualifications at 39/44%). Now, with the current scenario of 5.25% stress test rate, the they can now only borrow $448,880 (based on good credit score with max GDS/TDS at 39/44%). This is a difference of $20,650 which reduces your home options.

To ensure you are searching in the right price range and budgeting accordingly, it is important to consider this stress test change. If you are looking to purchase your first home or move, please don’t hesitate to contact me today for a better understanding of the rules and what you qualify for.


Avoid These First-Time Homebuyer Mistakes

As a first-time buyer, I am here to give you some tips on homebuyer mistakes to be on the lookout for so you can avoid them for the best experience possible!

Thinking You Don’t Need a Real Estate Agent
You might be able to find a house on your own, but there are still many aspects of buying real estate that can confuse a first-time buyer. Rely on your agent to negotiate offers, inspections, financing and other details. The money you would have saved on commission can be quickly gobbled up by a botched offer or overlooked repairs.

Going With The First Real Estate Agent You Find 
As much as not having a real estate agent can be a disadvantage, having the wrong one can also make the process more difficult. You don’t want to get halfway into house-hunting before realizing your real estate agent is the wrong fit for you. Ideally, you want to source an agent from a friend or family referral. However, if you are stuck or looking for more options, I’d be happy to introduce you to a Realtor partner that’s best suited for your specific search and location.

Getting Your Heart Set on a Home Without Doing Your Homework 
The house that’s love at first sight may not always be what it seems, so it is important to keep an open mind. If you jump in too fast you may be too quick to go over budget or you might overlook a potential pitfall. Taking the time for proper inspections, budget comparisons and long-term family planning can go a long way in ensuring your first home is the right home!

Committing to More Than You Can Afford 
This is one of the most common mistakes that first-time homebuyers can run into, but to ensure your future financial security it is imperative to truly consider your budget. You don’t want to sacrifice retirement savings, an emergency fund or potential holiday for mortgage payments. You need to stay nimble to life’s changes and overextending yourself could put your investments—including your house—on the line.

Fixating on the Lowest Interest Rate
A reasonable interest rate is important, but not at the expense of heavy restrictions and penalties. Make a solid long-term plan to pay off your mortgage and then find one that’s flexible enough to accommodate life changes, both planned and unexpected. I would be happy to discuss all of your mortgage options with you to ensure that you get the best overall mortgage product with a rate that suits YOU!

Choosing a Fixer-Upper Simply for the Cheaper Listing Price
That old character home may have loads of potential, but it is vital to be extra diligent during the inspection period. What will it really cost to get your home to where it needs to be? Negotiating a long due-diligence period will give you time to get estimates from contractors in case you need to back out.

Diving Into Renovations as Soon as You Buy
Whether or not you choose a fixer-upper or simply want to update some things in your new home, it is important not to rush into them. While renovations may increase the value of your home, overextending your credit to get upgrades done fast doesn’t always pay off. Take time to make a solid plan and the best financial decisions. Living in your home for a while before renovating will also help you plan the best functional changes to the layout.

Not Researching the Neighbourhood
It may be the house of your dreams, but annoying neighbours or a nearby industrial zone can be a rude awakening. Spend some time in the area before you make an offer and talk to local business owners and residents to determine the pros and cons of living there.


Economic Insights with Dr. Sherry Cooper

Canadian Jobs Market Rebounds in June As Lockdown Eases.

Canada’s Jobs Recovery Resumed in June As Lockdown Began to Ease
This morning, Statistics Canada released the June 2021 Labour Force Survey showing employment rose 230,700 (1.2%) in June, rebounding from a cumulative decline over the previous two months of 275,000. Total hours worked were little changed. The national unemployment rate fell 0.4 percentage points to 7.8%.

Jobs continue to swing back and forth as the various COVID waves drive lockdowns and reopenings. Hopefully, we’re in the last of the reopenings. Services accounted for all of the gains. Hospitality jobs were the biggest gainer, as expected, adding 101k positions, but they remain well below pre-virus levels. Restrictions are expected to continue easing through the summer, which should mean more solid gains over the next couple of months. Other sectors seeing a boost from the reopening were retail/wholesale (+78k), education (+26k) and health care (+20.5k). Goods sectors were down across the board, with losses concentrated in construction (-23k) and manufacturing (-12k).

Beyond the headline increase, one of the bigger stories in this report is the sharp 0.6 ppt rise in the participation rate to 65.2%. That’s the largest increase in a year and leaves the rate 3-4 ticks away from pre-COVID levels. Compare that to the U.S., where the participation rate is still nearly 2 ppts lower than in early 2020. The rise in the participation rate limited the decline in the jobless rate to 0.4 ppts to 7.8%, still some wood to chop there. The rising participation rate should alleviate some concerns about widespread labour shortages.The bulk of the gains were in pandemic-exposed sectors, like retail, food and accommodation, that got hit most by the new containment measures. Employment in accommodation and food services was up 101,000. The retail sector added 75,000 jobs.

Increasing vaccination rates and falling Covid-19 case counts have allowed the country to finally re-open restaurants, bars and retail stores after months of closures. Ontario began allowing patio dining earlier this month, and several cities in Quebec have further relaxed restrictions, allowing indoor dining for the first time this year.

With the June gains, Canada has recovered 2.65 million of the 3 million jobs lost at the height of the pandemic last year. The nation created 263,900 part-time jobs, with full-time employment down 33,200.Employment growth in June was entirely in part-time work and concentrated among youth aged 15 to 24, primarily young women. Increases were greatest in accommodation and food services and retail trade, consistent with the lifting or easing public health restrictions affecting these industries in late May and early June in many jurisdictions.

The number of employed people working less than half their usual hours fell by 276,000 (-19.3%) in June. Total hours worked were little changed and were 4.0% below their pre-pandemic level.

The employment increase in June was in part-time work, which rose by 264,000 (+8.0%) following combined losses of 132,000 over the previous two months. The overall level of part-time employment was essentially the same as in February 2020, before the COVID-19 pandemic. Increases in the month were driven by accommodation and food services and retail trade—two industries where part-time workers represent an above-average proportion of employment—and were concentrated among youth.

After falling by 143,000 over the previous two months, full-time work was little changed in June and was 336,000 (-2.2%) lower than its pre-pandemic level.

GAINS WERE DRIVEN BY PRIVATE-SECTOR EMPLOYEES, WHILE SELF-EMPLOYMENT DECLINES.
The number of private-sector employees rose by 251,000 (+2.1%) in June, following two monthly declines. As of June, the number of private-sector employees was 2.5% lower (-313,000) than in February 2020.

In the public sector, employment rose by 43,000 (+1.1%) in June, bringing it to 180,000 (+4.6%) above pre-pandemic levels. Employment in this sector has trended up following the initial wave of the pandemic, particularly driven by increases in health care and social assistance, public administration, and educational services.

The number of self-employed workers fell by 63,000 (-2.3%) in June and was down 7.2% (-207,000) compared with February 2020. Self-employment is a broad category that includes workers in various situations, including working owners of incorporated or unincorporated businesses and independent contractors. Compared with June 2019, declines in the number of self-employed were widespread across multiple industries and were concentrated among the self-employed with paid help.

THE EMPLOYMENT RATE REMAINS BELOW PRE-PANDEMIC LEVELS.
To fully understand current and emerging labour market trends, it is essential to consider employment change against the backdrop of population change, which totalled 1.1% (+334,000) between February 2020 and June 2021. To keep pace with this population growth and maintain a stable employment rate—that is, employment as a proportion of the population aged 15 and over—employment would have had to grow by 203,000. Instead, total employment was 340,000 lower in June than in February 2020, and the employment rate was 1.7 percentage points lower (60.1% compared with 61.8%).

NUMBER OF CANADIANS WHO WORKED FROM HOME DROPS BY NEARLY 400,000
Among Canadians who worked at least half their usual hours in June, the number who worked from home fell by nearly 400,000 to 4.7 million. For 2.6 million of these people, working from home represented an adaptation to the COVID-19 pandemic, as this was not their usual work location. At the same time, the number of people working at locations other than home rose by approximately 700,000 to 12.3 million.

Almost one-third (31.4%) of workers aged 25 to 54 and more than one-quarter (27.2%) of those aged 55 and older worked from home in June. Due to their concentration in industries where working from home is less feasible, such as accommodation and food services, a far smaller proportion of youth aged 15 to 24 (12.9%) did so.

Regionally, Ontario and Quebec led the way higher, though B.C. and Nova Scotia had solid increases as well. Interestingly, even with restrictions easing through most of the country, only five provinces reported job gains.

Bottom Line 

The jobs report is the last major piece of economic data before next week’s Bank of Canada policy decision, where it’s expected to continue paring back its stimulus efforts. The Bank of Canada is among the first from advanced economies to shift to a less expansionary policy, having already cut its purchases of Canadian government bonds to $3 billion weekly from a peak of $5 billion last year.

Analysts anticipate that will come down to C$2 billion per week at the July 14 meeting before eventually falling to a weekly pace of about C$1 billion by early next year. In addition to the bond tapering, the market has priced in at least one interest rate hike by this time next year.

Canada’s economy remains 340,000 jobs shy of pre-pandemic levels. The unemployment rate was below 6% before the pandemic.

With vaccination rates rising and restrictions easing, economists are predicting a strong rebound in the second half. According to a Bloomberg News survey of economists earlier this month, Canada’s expansion is seen accelerating to an annualized pace of 9.1% in the third quarter, with a 6% gain in the final three months of 2021. Consumer and business confidence regarding the outlook has recently hit record highs.

Please Note: The source of this article is from SherryCooper.com/category/articles/ 

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