8 Sep

IT’S NEVER A BAD TIME TO PLAN

General

Posted by: Kulwinder Singh Toor

IT’S NEVER A BAD TIME TO PLAN

Do successful entrepreneurs just open their doors for business without a business plan? Does a chef open a restaurant without a menu? Do pilots depart the hanger without a flight plan? Can you build a house without architectural plans?…I could go on forever! The answer is NO to all the above.

I’m a planner. Whether it’s for personal or business purposes, I always have a plan. I operate best when I know what is happening and how I’m doing it. Planning is the key ingredient to crossing the finish line successfully.

Case in point…

When it comes to acquiring a mortgage, whether it’s your first, second, third…or tenth you need to establish a PLAN! You need to connect with your trusted Dominion Lending Centres mortgage broker to start the application process.

Am I suggesting you need to create a full blown SWOT analysis (Strengths Weaknesses Opportunities and Threats) to seek mortgage financing?

No… but it wouldn’t hurt.

All joking aside, you should have an action plan: PLAN A and possibly a PLAN B. If you need a PLAN C then there should have been more preparation put into PLANs A and B.

THERE ARE 4 PARTS TO EVERY MORTGAGE.

  1. DOWN PAYMENT – How much skin-in-the-game are you putting in? Where is it coming from, saved or gifted? Where is it now?
  2. CREDIT – How long have you had it? What are the limits and how do you utilize it? How many forms of credit do you have?
  3. INCOME – How long have you been at the current job? Salary or hourly? Have you jumped around to different industries or stayed within? Self-employed or employee?
  4. SUBJECT PROPERTY – Where is the property? What is the property? Condo, townhouse, detached, farm on acreage with coach house and out-buildings? Age? Materials used to build? Remaining economic life? Square footage? Past or present issues?   

Before you find the subject property to purchase, the best course of action is to prepare. Why try to obtain financing in three to six days when you could have reduced the stress level by planning ahead of time. Mortgage Brokers call it the Pre-Qualifying Process. As a mortgage professional, I review the first three parts of the application and lock in a rate for up to 120 days.

Some people may ask WHY plan or WHEN to start planning. The main reason one should plan is to simply make sure there are no hidden surprises. If there are any negative aspects to the file, a plan would give us time to find a solution. When the decision has been made to purchase or re-finance (and mortgage funds are required), that is the exact time to connect with your Mortgage Broker. The time is now… immediately. A plan will double your success rate for obtaining approval for mortgage financing.

MICHAEL HALLETT

Dominion Lending Centres – Accredited Mortgage Professional

24 Aug

HOW LOW CAN THEY GO? THOUGHTS ON CAP RATE COMPRESSION

General

Posted by: Kulwinder Singh Toor

24 AUG 2017

HOW LOW CAN THEY GO? THOUGHTS ON CAP RATE COMPRESSION

Cap Rates are one of the key metrics in commercial real estate investment analysis. In very simple terms, its the ratio of rent paid by your tenants, to the price/value of the building. An important barometer on the current state of the market, cap rates are inversely related to value. As the price/value goes up, the cap rate decreases. Falling prices infer the inverse is true.

In our post entitled Cap Rates and Property Valuation. Understanding the Variables. we shared that high demand and well located properties, consistently sought after by potential investors, tend to command a lower cap rate. Similarly, low cap rates are typically seen with commercial properties leased on a long term basis to strong tenants. Perhaps a nationally recognized retailer, a major financial institution, or perhaps a governmental agency or department. Investor risk in such situations is low, and a sales price reflective of a low cap rate would be expected.

Conversely, a property that is perhaps not as well located, not as well leased, or which may be classified as a specialty use property, would command a higher cap rate. They are perceived to involve higher owner/investor risk. Okay, so far so good.

What About Risk?

What does the recent, and seemingly on-going cap rate compression, tell us about risk?

Those schooled in appraisal and valuation methodology, the writer included, have long been taught that increases in property income are a major driver of value, and consequently of lower cap rates. Furthermore, cap rates reflect the risk free return plus a risk premium, less the growth in long term rental income.

So if rental income is stagnant, as it is in many locations, then would lower cap rates not infer that investors are repricing their attitude towards risk? Or are we mispricing risk in the market?

Can We Expect Longer Term Rental Growth?

The components which enter into an assessment of the relative risk of a real estate investment of course include financing costs. These costs are directly related to bond yields, as Government Bonds often are held to be the “risk free” investment alternative for institutional lenders. Bond yields are at historically low levels. So if cap rates are continuing to fall, have investors become immune to risk? Or are investors perhaps betting on longer term rental income growth?

I am starting to think that there is a continued bifurcation in the market. Off shore investors have a different take on “risk free” investing it seems. They are often larger players, likely have greater access to less expensive funding, and perhaps more importantly, have a longer term investment horizon.

The market does not however, differentiate between local and offshore buyers. Cap rates reflect buyer sentiment. In this increasingly global marketplace, domestic investors are of necessity on the same playing field with larger off shore investors. The result seemingly is a continued cap rate compression. By some accounts this reflects an absence of a risk premium, or at the very least, a difference of opinion as to what constitutes risk. And speaking about risk, the upside on interest rates is very real…..but that’s for another post.

Allan Jensen

ALLAN JENSEN

Dominion Lending Centres – Accredited Mortgage Professional

16 Aug

10 THINGS NOT TO DO WHEN APPLYING FOR A MORTGAGE – BUYING A HOME OR REFINANCING

General

Posted by: Kulwinder Singh Toor

10 THINGS NOT TO DO WHEN APPLYING FOR A MORTGAGE – BUYING A HOME OR REFINANCING

Have you been approved for a mortgage and waiting for the completion date to come? Well, it is not smooth sailing until AFTER the solicitor has registered the new mortgage. Be sure to avoid these 10 things below or your approval status can risk being reversed!

1. Don’t change employers or job positions
Any career changes can affect qualifying for a mortgage. Banks like to see a long tenure with your employer as it shows stability. When applying for a mortgage, it is not the time to become self employed!

2. Don’t apply for any other loans
This will drastically affect how much you qualify for and also jeopardize your credit rating. Save the new car shopping until after your mortgage funds.

3. Don’t decide to furnish your new home or renovations on credit before the completion date of your mortgage
This, as well, will affect how much you qualify for. Even if you are already approved for a mortgage, a bank or mortgage insurance company can, and in many cases do, run a new credit report before completion to confirm your financial status and debts have not changed.

4. Do not go over limit or miss any re-payments on your credit cards or line of credits
This will affect your credit score, and the bank will be concerned with the ability to be responsible with credit. Showing the ability to be responsible with credit and re-payment is critical for a mortgage approval

5. Don’t deposit “mattress” money into your bank account
Banks require a three-month history of all down payment being used when purchasing a property. Any deposits outside of your employment or pension income, will need to be verified with a paper trail. If you sell a vehicle, keep a bill of sale, if you receive an income tax credit, you will be expected to provide the proof. Any unexplained deposits into your banking will be questioned.

6. Don’t co-sign for someone else’s loan
Although you may want to do someone else a favour, this debt will be 100% your responsibility when you go to apply for a mortgage. Even as a co-signor you are just as a responsible for the loan, and since it shows up on your credit report, it is a liability on your application, and therefore lowering your qualifying amount.

7. Don’t try to beef up your application, tell it how it is!
Be honest on your mortgage application, your mortgage broker is trying to assist you so it is critical the information is accurate. Income details, properties owned, debts, assets and your financial past. IF you have been through a foreclosure, bankruptcy, consumer proposal, please disclose this info right away.

8. Don’t close out existing credit cards
Although this sounds like something a bank would favour, an application with less debt available to use, however credit scores actually increase the longer a card is open and in good standing. If you lower the level of your available credit, your debt to credit ratio could increase and lowering the credit score. Having the unused available credit, and cards open for a long duration with good re-payment is GOOD!

9. Don’t Marry someone with poor credit (or at lease be prepared for the consequences that may come from it)

So you’re getting married, have you had the financial talk yet? Your partner’s credit can affect your ability to get approved for a mortgage. If there are unexpected financial history issues with your partner’s credit, make sure to have a discussion with your mortgage broker before you start shopping for a new home.

10. Don’t forget to get a pre-approval!
With all the changes in mortgage qualifying, assuming you would be approved is a HUGE mistake. There could also be unknown changes to your credit report, mortgage product or rate changes, all which influence how much you qualify for. Thinking a pre-approval from several months ago or longer is valid now, would also be a mistake. Most banks allow a pre-approval to be valid for 4 months, be sure to communicate with your mortgage broker if you need an extension on a pre-approval.

JENNIFER FUENTES

Dominion Lending Centres – Accredited Mortgage Professional

14 Aug

KNOW YOUR NUMBERS

General

Posted by: Kulwinder Singh Toor

KNOW YOUR NUMBERS

Most people know their weight. Their height. Their age. Their birth date. Their address. Their SIN. Even their income. Could you imagine if you always had to say to someone, “Can I get you that information when I get home? It’s written down in my planner… ”
Knowing your everyday numbers is important. It allows you to make quick and informed decisions.
Therefore I, as a Mortgage Broker, have made it my goal to know my numbers — to memorize certain things so that when called upon I can provide concise and detailed information in the simplest format. I am going to arm you with some quick mortgage number facts and mortgage industry calculations that I use daily.

1: Payments are $400/month/every $100,000 mortgage amount with 20% down or more. Example: $400,000 mortgage = $1,600 monthly mortgage payment.

2: Payments are $450/month/every $100,000 mortgage amount, 19.99% down or less. Example: $400,000 mortgage = $1,800 monthly mortgage payment.

3: For every $10,000 mortgage amount increase, payment increases by $40/month with 20% down or more. Example: $420,000 mortgage = $1,680 monthly mortgage payment.

4: For every $10,000 mortgage amount increase, payment increase $45 per month, 19.9% down or <. Example: $420,000 mortgage = $1,890 monthly mortgage payment.

5: If rate increases by 0.25%, monthly payment increases by $13 per month per $100,000.

6: If rate increases by 100% the monthly payment only increases by 33%.

7: A $13,000 credit-card debt cancels out $100,000 mortgage money.

8: A $400 per month vehicle payment cancels out $100,000 mortgage money.

9: A $20,000 gross income services a mortgage of $100,000. Example: Household income of $120,000, qualifies for a $600,000 mortgage.

10: A $400,000 mortgage balance (FIXED rate term) holds a penalty of approx $3,200 with a monoline lender. With a traditional bank, it’s closer to $16,000. This term paid out with 24 months remaining.

Knowing your numbers is likely going to change this fall. There are changes coming and they are not small ones. The federal government is going to make yet another amendment to the lending policy. Nothing specific or concrete yet. Coming this fall (2017) you are likely going to see your borrowing power reduced by as much as 25%. If today you qualify for a $500,000, that amount could drop to approximately $400,000 is as little as 3 – 4 months.
The bottom line is simple. Borrowers need to focus on what they can control:

  • Coming up with larger down payments, saved and gifted.
  • Earning more income. If you are self-employed, then you may want to re-structure your reported income to CRA. Verified income will be essential. This is LINE 150 of our tax documents.
  • Good, strong, clean credit, both credit score and credit history.

Be sure that you know the power of your own numbers. Don’t be concerned with the past. Every day we move forward. Changes happen all the time; we need to adapt or be left behind. Asking WHY is sometimes not the best reaction but rather HOW. How do I adapt? How do I become current?
Overall, Canada has a very strong, dependable and stable financing and real estate market. The changes that are handed down by the federal government are mandatory, right or wrong… they need to be followed. And if you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

MICHAEL HALLETT

Dominion Lending Centres – Accredited Mortgage Professional

11 Aug

IS IT REALLY ALL ABOUT RATE?

General

Posted by: Kulwinder Singh Toor

IS IT REALLY ALL ABOUT RATE?

Is It Really All About Rate? You might conclude that it is. You may think that securing the lowest rate is key to your real estate investment success. However, rate is but one of the four main components of any commercial mortgage offer. Amount, term and amortization period are also critical factors. It’s all related to your overall investment strategy, and your property specific goals.

1. Amount
Loan Amount is often the critical component of your financing. This is particular true in the case of a property purchase. The loan amount will drive your other considerations. You may have secured a great low rate, but if you lender is only prepared to provide you a loan equal to 60% of purchase price or appraised value, are you prepared to inject additional equity? Have you considered what this will do to your real estate return? Will you need to source secondary financing, and if so, at what cost? Will you need to seek partners or co-investors to complete your property purchase?

2. Term
Important, but often overlooked, is the term of your financing. In our post entitled Mortgage Term Preferences, we outlined borrower preferences for length of mortgage terms selected. The importance of developing a real estate strategy cannot be overstated.
Are you a buy and flip investor, or are you interested in a long term hold? How long are your primary Lease terms? Perhaps you acquired the property at an advantageous price. You may have created value by releasing to stronger tenants at higher rents. Perhaps you’ve updated the property. Are you now locked into an inappropriate mortgage term, unable to “release equity” to leverage this added value?
What is your portfolio strategy? If you have several assets, conventional wisdom would suggest that you stagger your mortgage maturities.
What is your property specific exit strategy? If you’ve maximized value, and little future value upside is available in the short term, do you want to position yourself so that you can entertain an Offer to Purchase without having to consider potentially costly mortgage prepayment penalties?
Conversely you may have acquired the property with the expectation that it will represent a major part of your future retirement strategy. Is a longer mortgage term more appropriate, with certainty of mortgage payments? All of these considerations will inform your decision regarding length of Term.

3. Amortization
From personal experience, often little attention is paid by Borrowers to amortization periods. Your preference will be guided by your investment strategy. Your need to manage cash flow, and the specific income generating characteristics of your property will be key.
Is it important to you to be debt debt free by a particular point in time? Do you want to grow your property specific or portfolio equity so that you can leverage the asset(s) for future acquisitions? Conversely, are you in a joint venture ownership situation, where investors are looking for the maximum cash flow? All of these considerations will inform your amortization period decision.

4. Rate
Rate is the component which garners the most interest (pun unintended). But is it less critical to your financing plans than you’ve previously thought? A keen rate offered by a lender who can only provide you a 5 year term, on a 20 year amortization, with no prepayment privileges, may not be the right loan for you.
If you are conventionally financing a well leased commercial asset in a major centre, chances are that a number of lenders will be interested in your investment opportunity. Lenders will be competing for business like yours. They will have a budget for annual loan approvals. As such, available market rates from major “A” lenders will likely not differ greatly. Rates are at a historically low point. Though rate upside is a concern, few are expecting rapid, nor exorbitant increases.

Your Investment Strategy will be Key

So Is It Really All About Rate? No, it is not. By all means consider rate, but ensure that all the loan terms align with your property specific, and overall portfolio strategy. Choose your lender wisely!
Understand which of these 4 factors or combination of factors is most important to you. All are negotiable to a greater or lesser extent.
Perhaps you need a full loan for an acquisition, so loan amount will be the critical piece. Paying a slightly higher rate, in exchange for the “right” loan amount, so that you can make effective use of debt, may be a wise decision.
Possibly debt service coverage and sufficiency of cash flow is key to your strategy. You may anticipate a softening of rental rates, or possible anticipate a vacancy increase. Focus on securing a comfortable (i.e. lengthy) amortization period.
Perhaps a number of your Leases are structured to mature in 36 months. Arrange the term of your loan to coincide. Taking a a 5 year term may lock you into waiting an additional 24 months before you can secure an increased loan (without going the secondary financing route).
Understand what is important to you. Implement your commercial real estate investment strategy accordingly.

If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

ALLAN JENSEN

Dominion Lending Centres – Accredited Mortgage Professional

8 Aug

FINANCING SUCCESS: FINDING FUNDING WHEN THE BANK TURNS YOU DOWN

General

Posted by: Kulwinder Singh Toor

FINANCING SUCCESS: FINDING FUNDING WHEN THE BANK TURNS YOU DOWN

For businesses large and small, a loan may be needed to overcome financial distress, purchase real estate, or acquire equipment to make their jobs easier. Business loans come in all sizes and for use in every aspect of business. Depending upon the size, age, and niche of your business, you can find available funding for every financial need that you can think of. The problem isn’t the availability of funding, it is the turndown rate of traditional banks that makes obtaining these loans so difficult. Businesses which have been turned down for a loan by a traditional bank often meet their ultimate end through failure. This is because business owners and representatives do not realize that alternative lending options exist and that they are easier to obtain than you may think.

What is Alternative Funding?

Dominion Lending Centres Leasing provides financing options for businesses who have been turned down for a traditional loan or for businesses that do not meet the requirements for a traditional loan. DLC Leasing matches businesses with lenders and investors within their network to provide funding outside of the traditional finance institutions. Brokers will assist business owners in finding the right loans to suit their needs and they will help with the application process as well.

Alternative funding is often grouped into specific niches. Lenders and investors will provide funding for certain needs rather than generalized financing. One lender may choose to provide funding for businesses which are in the construction field while another may choose to provide funding to businesses in retail or food service. This choice will often reflect the resources and network of the lender and will give the borrower a greater picture of where the money is coming from.

What Type of Loan Do You Need?

Every business is different and the needs of those businesses vary just as much. Where one company needs funding to pay for employee wages or utility bills, another may be looking for funding to purchase another location. The size of your business will be a determining factor for the amount of funding that you can receive. A larger business, with more income, will receive a larger loan where a small business will receive a lesser amount. Besides the size of your business, your loan broker will need to see detailed financial records, copies of your tax statements, and may even need to evaluate your accounts receivable.

When applying for a loan of any size, it is important to know what type of loan you need ahead of time. Here is an example of some of the most popular business loans available:

  • Equipment loan – Funds are used to purchase equipment for business use. Either to replace old equipment or to upgrade to more modern equipment. This can be used for large machinery and production equipment as well as office and restaurant equipment.
  • Real Estate loan – This type of loan is used to purchase real estate for business use. It cannot be used for personal real estate and will likely be calculated based on the business income.
  • Hard Money loan – Typically secured by real property and are often a few months to only a few years in length. Hard money loans provide funding to assist in a temporary financial situation or while your business is waiting for long-term financing to be approved
  • Accounts Receivable loan – The amount of this loan is based on your current accounts receivable and can usually be used for any financial needs of your business. This type of loan provides funding to help you get through financial distress because of money that you are waiting to receive.

Once you have decided the type of loan that your business needs, you will need to find a reliable, honest and knowledgeable commercial finance broker to work with. Research your broker to make sure that you are protected throughout the entire process.

JENNIFER OKKERSE

Dominion Lending Centres – Director of Operations, Leasing Division

4 Aug

CONVENTIONAL MORTGAGES HAVE BECOME…

General

Posted by: Kulwinder Singh Toor

CONVENTIONAL MORTGAGES HAVE BECOME…

What have they become? Well in one word complicated. I just ran some numbers for a client and it is based on a $400,000 purchase with 20% or $80,000 down payment. These three scenarios have been reproduced in our Filogix system and the numbers are as per their calculators.

Scenario one is get a better rate by paying the 2.4% CMHC fee on the mortgage and get a 2.89% 5 year fixed rate. Premium in this case becomes $7680.00 and the amount of interest paid over the 5 years based on just monthly payments would be $48,191. Balance on this scenario after 5 years is $279,488.

Scenario two would be just use a lender who doesn’t charge a CMHC fee (at least for now) but the rate is 3.39%. Over the 5 years they would have paid $50,286 in interest payments but the balance on the mortgage would be $275,537 at the end of the 5-year term.

Scenario three is use a hybrid product such as MCAP 79 where you pay a 1% government fee so you are financing 80%, but in reality, you had to come up with 21% of the mortgage amount or $4,000 extra which is capitalized back into your mortgage. In this scenario, you currently get a rate of 3.09%, pay interest of $45,622 and have an end of term balance of $273,270.

To say the least this has become a game of really knowing your products and your clients. If the end game is to avoid paying CMHC then you may end up paying too much unless your broker is as we are and has access to specialty products in the market. Check with your Dominion Lending Centres Mortgage Broker to see what’s available.

LEN LANE

Dominion Lending Centres – Mortgage Professional

2 Aug

UNDERSTANDING HOW BRIDGE FINANCING WORKS

General

Posted by: Kulwinder Singh Toor

UNDERSTANDING HOW BRIDGE FINANCING WORKS

Sometimes in life, things don’t always go as planned. This could not be truer than in the world of Real Estate. For instance, let’s say that you have just sold your home and purchased a new home. The thought was to use the proceeds of the sale of your house as the down payment for the new purchase. However, your new purchase closes on June 30th and the sale of your existing house doesn’t close until July 15th—Uh-Oh! This is where Bridge Financing can be used to ‘bridge the gap’.

Bridge Financing is a short-term financing on the down payment that assists purchases to ‘bridge’ the gap between an old mortgage and a new mortgage. It helps to get you out of a sticky situation like the one above and has a few minimal fees associated with it.

The cost of a Bridge Loan is comprised of two parts. The first is the interest rate that you will be charged on the amount of funds that you are borrowing. This will be based on the Prime Rate and will vary from lender to lender. As a rule, you can expect to pay Prime plus 2.5%. The second cost to consider is an administration fee. Again, this will vary depending on the lender and can range from $200-$695.

The amount that you are able to borrow is easily calculated. The calculation looks like this:

Sale price
(less) estimated closing costs of 7%
(less) new mortgage of the purchase property

=Bridge Financing.

*Note: the closing costs included the expense of realtor commissions, property transfer tax, title insurance, legal fees and appraisal costs if applicable*

So that’s the cost side of things, now the next question is: how long? The length of time that you can have Bridge Financing is going to vary again from lender to lender as well as with what province you are in. For most, it is in the range of 30-90 days but there are some lenders that will go up to 120 days in certain cases.

Before applying for Bridge Financing, you must also have certain documents at the ready to present. These documents include the following:

1. A firm contract of purchase and sale with a copy of the signed and dated subject removal on the property that you are selling and the property that you are purchasing.
2. An MLS listing of the property being sold and purchased.
3. A copy of your current mortgage statement.
4. All other lender requested docs to satisfy the new mortgage of the upcoming purchase.

Once you have those documents, you can work with a qualified mortgage broker to apply for bridge financing. It is an important tool to understand and a great one to have in your back pocket for when life throws you one of those ‘curve balls’. You can have peace of mind knowing that if/when that situation arises, you are not without a strong option that can provide you with interim financing for minimal cost.

As always, if you have any questions about Bridge Financing, or any questions about your mortgage (be it new or old) contact a Dominion Lending Centres mortgage broker. We are well-versed in all things mortgage related and can help come up with creative, cost effective solutions for you.

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional

1 Aug

HOW CREDIT AFFECTS YOUR LOAN APPROVAL

General

Posted by: Kulwinder Singh Toor

HOW CREDIT AFFECTS YOUR LOAN APPROVAL

When you apply for a loan, lenders assess your credit risk based on a number of factors. Your credit score, as well as the information on your credit report, are key ingredients in determining whether you’ll be able to get financing and the rate you’ll pay. To get approved for a loan and to pay a lower interest rate it’s important that your credit report reflects that you’re a responsible borrower who pays their debts on time with a low risk of defaulting.

Credit Report vs. Credit Score
To start with, it’s important to understand that your credit report and your credit score are two separate things.

Credit Report – Your credit report contains information detailing your credit history. Sources include lenders, utility companies and landlords. This information is compiled by one of two major credit-reporting agencies (Equifax and TransUnion) that try to create an accurate picture of your financial history. Credit files include information such as:
• Name, address and social insurance number
• Types of credit you use
• When you opened a loan or line of credit
• The balances and available credit on your credit cards and other lines of credit
• Information about whether you pay your bills on time
• Information about any accounts passed to a collection’s agency
• How much new credit you’ve opened recently
• Records related to bankruptcy, tax liens or court judgments
Errors on your credit report can reduce your score artificially. In fact, 1 in 4 consumers have damaging credit report errors. Therefore, it’s important to stay up-to-date on your credit report history. If there is an error, you should dispute it and get it removed as soon as possible. Last year, 4 out of 5 consumers who filed a dispute got their credit report modified, according to a U.S. study by the Federal Trade Commission.

Credit Score – Your credit score is the actual numeric value extrapolated from the information in your credit report. A credit-reporting bureau applies a complex mathematical algorithm to the information in your credit file to create your numerical credit score.
Beacon is the most widely known credit scoring formula in Canada and is used by many creditors. Your FICO score can range from 300 to 850, with under 400 being very low and 700+ putting you in the healthy range. Your credit score is meant to give potential lenders an idea of how big of a financial risk you are. The higher your score, the less likely you are to default or make late payments and the more likely you are to be approved for financing.
Your score is based most strongly on three factors: your payment history (35% of your score), the amounts owed on credit cards and other debt (30%) and how long you’ve had credit (15%).

What Are They Used For?
Lenders glance at your credit score to determine your credit risk. Most traditional lenders have pre-set standards. If your credit score is within a certain range, they’ll offer you certain credit terms. If you don’t fall within their approved range, then you may be denied. Most banking institutions will only approve a loan if the client has a credit score of at least 640. A score of 700, however, gives you a much better chance at gaining approval at most lending institutions and at reasonable rates.
As far as interest rates are concerned, banks use an array of factors to set them. The truth is they are looking to maximize profits for themselves and shareholders. On the other hand, consumers and businesses seek the lowest rate possible. A commonsense approach for getting a good rate would be having the highest credit score possible.
It’s important to note that if you apply for a loan, the lender will most likely pull your credit score through what is commonly called a “hard inquiry” on your credit, which slightly lowers your credit score. Therefore, it’s important to know your credit score ahead of time, fix any errors, and apply for loans which you have a good chance of being approved for.

Things You Can Do to Improve Your Credit Score

1. Check your credit report for errors – While the credit agencies do their best to keep your record free of errors, they can make mistakes. It’s important to check your credit report at least once a year — consumers are entitled to one free credit report every 12 months — to ensure all of the information is correct. Each agency may have slightly different information and, consequently, may have errors another credit report doesn’t.
2. Set up payment reminders – Making credit payments on time is one of the biggest contributing factors of your credit score. It may be helpful to set up automatic payments through credit card or loan providers so you don’t forget to pay when payment is due.
3. Reduce the amount of debt you owe – Stop using your credit cards. Use your credit report to make a list of all your accounts and check recent statements to determine how much you owe on each account and what interest rate they’re charging you. Then create a payment plan to lower or eliminate the debt you still owe.

How Dominion Lending Centres Can Help
Many businesses need financing to start or expand. Although your credit score is only one component of your lender’s decision, it’s an important one. If you have a low credit score and are unable to secure financing through a traditional bank, DLC Leasing will be able to get you approved with our team of lenders. When the bank says no, our team will still say yes with flexible terms and interest rates.

JENNIFER OKKERSE

Dominion Lending Centres – Director of Operations, Leasing Division

31 Jul

FIVE POINTS TO CONSIDER BEFORE YOU LIST YOUR HOME

General

Posted by: Kulwinder Singh Toor

FIVE POINTS TO CONSIDER BEFORE YOU LIST YOUR HOME

There are several things to consider before you take the plunge and put your home up for sale. This might sound obvious, but the first step is to call your mortgage broker, not your lender directly or your realtor.
You don’t have to look long for an unfortunate story of someone who didn’t understand their portability, penalty or transfer costs. Here’s how you avoid this scenario.

1. The anniversary date of your mortgage will depend on your penalty. If you are in a variable rate there usually (unless you took some kind of no frills product with an additional penalty for the appearance of a lower rate) will pay 3 months interest (so a monthly payment and a half) in a fixed rate it can be up to 1-4.5% of the outstanding mortgage balance. Remember we can estimate things, the only guarantee you will have of your penalty is when the lawyer requests the payout statement.

2. Just because a mortgage says its portable doesn’t mean you don’t have to completely re-qualify. Changing properties means complete requalification of everything; credit, income and property. Less than one per cent of mortgages actually get ported due to the changes in the market, or your circumstances.

3. If you have accumulated outside debt, you may not even qualify to purchase for more due to recent rule changes. You’ll need clarity on what the approximate net will be after anything that is required to be paid out to improve qualification.

4. If you list your property and want to buy first or need money for a deposit, you may need to change your mortgage first which you won’t qualify for if your property is already listed. This happens frequently when downsizers are selling.

5. Making a purchase requires a deposit that later forms part of the down payment, so understanding this before you go out shopping helps you plan for it

A little preparation helps the process go more smoothly, and Dominion Lending Centres mortgage specialists are here to help.

ANGELA CALLA

Dominion Lending Centres – Accredited Mortgage Professional