26 Nov

Tips On Getting Ready To Be a First Time Home Buyer


Posted by: Jeff Parsons

Very often, the first question is “what can I afford”. To answer this for a person getting ready to buy, we need to know about what is happening now, income, bills, savings, credit score etc. There are many positive things that you can do in the year or two prior to buying.

It is always best to consult with a Mortgage Broker well in advance to get started on the right path to becoming a home owner. If you already have some savings set aside, then you already have a great head start!

Here are some simple notes and tips to get you well on your way.

Special Income Note:

If using commission, lenders want to see a 2 year average income for commission/bonus income to use it at all. So file your Taxes each year and keep your NOA, Notice of Assessment that is mailed to you.

Down Payment:

You need to have a minimum 5% of the purchase price Down Payment and 1.5% of purchase price in your own funds. This CAN be gifted from an immediate family member.


$300,000 home = $15,000 minimum Down Payment, plus $4,500 for Closing costs

$200,000 home = $10,000 minimum Down Payment, plus $3,000 for Closing Costs

Co-signer or Co Borrower:

IF you can have a parent with good income and credit go on as a guarantor for your mortgage, then we can add their income to the file to strengthen your position.

IF you have a partner/co borrower, then their income, credit score etc. can be added to the mortgage as well to strengthen the file.

Budgeting – Try Mint.com – Free:

Start tracking your expenses, start with what you think you spend and see/track the reality (1-2months!) Set up bill date reminders and get notifications on your cell phone when you go over budget!

Find and stop the bleeding; unnecessary spending that can add to your savings.

NOTE: 3% of all unsecured debt has to be used as payment – even though reality payment is lower. $10K on a credit card = $300.00 payment and nearly $75,000 less mortgage buying power!!!

Crazy…..pay them down as much as possible!

Saving in RRSPs :

Save on Income Tax for filing next spring, lock it away!

Able to use up to $25,000 each TAX FREE as a First Time Home Buyer on a qualifying home value. Once you know what you can save per month, we can make it automatic (like a bill payment) OR you can save organically and then deposit every month or two into your RRSP account.

CALL ME – I have access to full line of Bank Products; RRSPs, TFSAs, Lines of Credit, Visa etc.

Check your Credit Score:

Equifax Customer Inquiries 1-800-465-7166

Pull your own credit bureau. Identify any errors or issues and fix now. You can call me when you get it, we can review and I can provide some tips on how to improve if need be!

Pay all bills on time, more than minimum payments!

Use NO MORE than 50% of available limit on cards – Going over 65% of limit reduces your score – EVEN if you are NOT over limit! Easy TIP: Pay on time and pay down debt a bit over next few months….then call to increase your limits! This will lower your % of credit utilization immediately for free and be a plus to your credit score.

Become a Rock Star that any lender will want to work with!

I really hope that this helps you in starting forward progress – starting is the hardest, but then it quickly becomes normal. Remember – we here at Dominion Lending Centres are here to help!


Kris Grasty

Dominion Lending Centres – Accredited Mortgage Professional

16 Nov

That Oh So Important Financing Condition


Posted by: Jeff Parsons

There you are, sitting down with your realtor and preparing an offer to purchase for that amazing home that you just looked at this afternoon. You get to the point in the conversation with your realtor about the need for a financing condition and you’re trying to remember what you talked about with your Mortgage Broker earlier in the week….were you approved? Pre-approved? Pre-qualified?

So here’s the thing, when it comes to placing an offer on a new property, the financing condition should always be there. The only reason for leaving the financing condition out of an offer is because you know that you could dip into your savings account right now and buy the house with cash if you had too.

If you cannot purchase the house with cash, then you really should have that pesky finance condition in the offer and here is why…

We know already that you’ve met with your Mortgage Broker, they have everything on file and they have told you that you’re pre-approved. It is important to understand that the pre-approval they issued is based on the information they have collected about you. However, they have no information about the house that you’re eventually going to purchase.

When your future lender reviews an application in full, there are two sides to your application. There’s you and then there’s the house. It’s important to note that the lender is investing in the whole package and at this point, no one knew what house you were going to buy. Your Mortgage Broker isn’t likely to receive any information on the specific property until you have an accepted offer. It is at that point when they will update your application and send in all of the details for a formal approval.

So you’re now wondering why all of this matters considering that during your pre-approval meeting your Mortgage Broker told you that you’re the perfect clients (great income, great credit, great down payment and just all around great people).

But what about the property? The lenders (and CMHC if you have less than 20% down) want to know that the same is true about the house you’re buying. Here are just a few questions that they are asking themselves about the house:

  • Is it being purchased for fair market value?
  • Is it located in a marketable neighborhood?
  • Are there any major or obvious defects that could affect its value
  • Is the house a previous grow op?

If something negative about the house comes back as part of the review, it could mean that the lender (or CMHC) could decline to finance the property. The financing condition gives you a way out of the agreement should something happen at this point. If you don’t have a financing condition, you could end up being legally tied to purchasing the home, with or without financing lined up. Definitely not a position you want to be in, so take the time to protect yourself by ensuring your offer to purchase includes a financing condition – and speak with us at Dominion Lending Centres.


Nathan Lawrence

Dominion Lending Centres – Accredited Mortgage Professional

9 Nov

Rate Hold vs Pre-Approval – A Common Misconception


Posted by: Jeff Parsons

mis-con-cep-tion (noun)– a view or opinion that is incorrect because it is based on faulty thinking or understanding; mistaken notion; an erroneous conception.

With not knowing how to start this particular blog post, I decided to look for some images that might summarize the topic best – What is the difference between a RATE HOLD and a PRE-APPROVAL?

I thought this picture 100% represented how these terms are perceived, you say one thing but you mean the opposite. For most people the term PRE-APPROVAL is more commonly used than the latter. The term RATE HOLD is generally only used in the broker/lender sphere.

Many years ago (seems like the ice age ago) one could place a phone call to their personal banker and lock in a mortgage, then it switched to only requiring a paystub maybe a bank statement and T4s.  Whereas now one requires their entire biography and proof of net worth followed by a blood sample… somewhat facetious, but there is more involved as lenders need to make an accurate risk assessment.

Times have changed and so should our line of thinking. Underwriting mortgages is not cheap and lenders have upfront costs that take years to recoup.

Rate Hold

These are generally automated where nobody even looks at the application.  The system only analyzes basic criteria; beacon score, loan-to-value, name and birthdate. No documents are even reviewed. A rate hold is simply just that, a rate hold. It’s just a certificate guaranteeing the stated rate for a stated period of time, usually to a maximum of 120 days. Rate holds are mostly utilized for borrowers who are going to purchase or refinance in the near future.


The pre-approval approach is generally a more detailed process, with all documents being reviewed, except for the subject property. The lender will have to approve the covenant based on the information provided such as employment, source of the down payment and credit history criteria. Approval of these three pillars is NOT a guarantee that the mortgage application will be approved. The lender still has to do its due diligence on the fourth pillar (subject property) as it must still meet all the lender’s and insurer’s guidelines if there is less than a 20% down payment.

The most common question you will hear during the purchase process is, ARE YOU PRE-APPROVED?

I have to worked with numerous clients that thought they were PRE-APPROVED by their ‘bank.’ But during the subject removal timeline found out that they were NOT pre-approved, all for various reasons. Instead there should be a series of questions asked:

  • Have you consulted with your Mortgage Expert?
  • If so, when was the last time you had a conversation with her/him?
  • Is there a rate hold or pre-approval in place? Do you understand the difference(s)?
  • Have you sent her/him your complete package of documents that was requested?
  • Are there any changes to employment, credit, the down payment or the purchase price?
  • Have you discussed the ‘plan’ for this property? This will determine the term and mortgage product chosen.
  • …and much more…

As you can see, there is much more to consider than just, ARE YOU PRE-APPROVED?

No one mortgage is exactly the same as someone else’s. The mortgage process is a complex labyrinth of puzzle pieces that have to fit together perfectly. Note that the puzzle pieces are constantly changing in this industry.

Due to the steep underwriting costs of each mortgage application, most lenders are electing to follow the RATE HOLD process. By analyzing a complete 4 pillar mortgage application package (credit, employment, down payment and subject property), the lender is able to maximize dollars spent to acquire a new client. Navigating the RATE HOLD/PRE-APPROVAL process should be left up to your trusted Mortgage Expert.

The best PRE-APPROVAL is the one that comes from your Mortgage Expert because they can analyze and do a pre-underwrite even before doing a RATE HOLD. With their expert advice you can construct a strategy that is tailored specifically to your mortgage financing scenario.

If you have any questions, please don’t hesitate to contact us at Dominion Lending Centres!


Michael Hallett

Dominion Lending Centres – Accredited Mortgage Professional

8 Nov

What is a credit report and why is it necessary?


Posted by: Jeff Parsons

What is a credit report and why is it necessary? It’s easy, it provides proof of your creditworthiness. Plain and simple!

In this day and age, it’s rare to find someone who doesn’t have some form of credit. This can include credit cards, personal loans, lines of credit, car loans,  student loans, mortgages and more. Anything that reports to one or both of the main credit reporting agencies in Canada, Equifax and TransUnion.

What this basically says is what your credit history and repayment habits are like. It reports when you paid on time, late or didn’t pay at all and you now have a collections company after you. It also reports when a creditor writes off a debt along with when there has been a bankruptcy or a consumer proposal. They also provide information on how well you have made your mortgage payments.

Your credit report will also show how much of your available credit has been utilized. So if the limit on your credit card is $2,000 and you owe $1,999, it gives the impression that you might be tight for funds and are using credit to keep afloat. Having several maxed out and over the limit debts can be a warning sign to credit issuers, along with mortgage lenders.

All this info creates scores which rate your credit worthiness. The higher the score, the better, especially when you are asking to borrow the most money you will probably ever ask to borrow – a mortgage on a house!

We have several categories of lending institutions. The best interest rates and terms are found with prime lending institutions such as the banks, monoline lenders (available through mortgage specialists), credit unions, etc. These options are usually only available to those with the best credit ratings.

There are lenders who will grant mortgages to those who have experienced credit challenges. Rates and terms are higher, often brokerage and lender fees apply. These “subprime” lenders also offer opportunities designed to assist those having difficulties to get out of the corner and improve their situation. Most of the time, these lenders are used in the short term until the borrower qualifies with prime lenders with better rates and terms.

There are circumstances where private lenders are also utilized. A good mortgage specialist will be able to assess the situation and tell you when this is necessary.

Of course, you will be notified well in advance anytime a fee will be charged by the broker or the lender.

Here’s what makes up your credit score and what impact they have on the bottom line. Payment History (how well you paid), Credit Debts (how many debts you have and how much they are utilized), Age of accounts (how long you’ve had these debts, the longer the better), Type of credit (they all impact differently, Credit Enquires, (are you a shopper spending lots of money, or in trouble?).

To find out how long negative comments stay on your credit bureau, check out this page on the Financial Consumer Agency of Canada’s website.

The biggest threats to your credit score are payments later than 30 days, maxed out credit cards, collections, proposals and bankruptcies.

The moral of the story….. Keep a close eye on those debts, keep payments up to date, don’t overextend yourself, and if you are having issues, talk with an advisor before it gets out of hand. There are many ways to prevent a credit rating breakdown, we here at Dominion Lending Centres can help.


Anne Martin

Dominion Lending Centres – Accredited Mortgage Professional

2 Nov

Federal RRSP First-time Home Buyers’ Program


Posted by: Jeff Parsons

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $25,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.

You must be considered a first-time home buyer.

You are not considered a first-time home buyer if you or your spouse or common-law partner owned a home that you occupied as your principal place of residence during the period beginning January 1 of the fourth year before the year of withdrawal and ending 31 days before your withdrawal. (Dec 31, 2010 or prior for anyone buying in 2015)

However, if you are a person with a disability, or you are buying or building a home for a related person with a disability or helping such a person buy or build a home, you do not have to meet this condition.

In addition, ALL of the following conditions must apply:

  • You must enter into a written agreement (Offer of purchase) to buy or build a qualifying home. The agreement may be with a builder, contractor, realtor or private seller.
  • You intend to occupy the qualifying home as your principal place of residence. When you withdraw funds from your RRSPs under the HBP, you have to intend to occupy the qualifying home as your principal place of residence no later than one year after buying or building it. Once you occupy the home, there is no minimum period of time that you have to live there.
  • Your repayable HBP balance on January 1 of the year of the withdrawal is zero.
  • Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal.
  • You are a resident of Canada.
  • You buy or build the qualifying home before October 1 of the year after the year of withdrawal.

Your RRSP issuer will not withhold tax from the funds you withdraw if you meet the HBP conditions and complete Form T1036.

You can withdraw a single amount or make a series of withdrawals throughout the same year and January of the following year, as long as the total of your withdrawals is not more than $25,000.

If you buy the home with your spouse or common-law partner, or other individuals, each individual can withdraw up to $25,000 from his or her RRSP, provided each of you meet the HBP conditions.

Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP.

Your first repayment is due the second year following the year in which you made your withdrawals.

You have up to 15 years to repay the amount that you withdrew under the HBP. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew until the full amount is repaid to your RRSPs.


Len Anderson

Dominion Lending Centres – Accredited Mortgage Professional