As property prices continue to rise across Canada, the conversation around “how to climb the property ladder” has made a subtle shift to “how to get on the property ladder in the first place.” Especially if you’re single.

Whereas before it was assumed anyone would qualify to buy a starter home (or condo), nowadays with increased housing prices and the government making it tougher to qualify for a mortgage through a financial stress test, becoming a homeowner isn’t a walk in the park. Qualifying for a mortgage on a single income is becoming increasingly difficult.

Unfortunately, just because you have a proven ability to pay rent on time doesn’t mean you will qualify to make mortgage payments in the same amount. So if you are looking to get into the housing market, but don’t qualify on your own, maybe you should consider co-ownership as an option!

So what is co-ownership anyway? Well, co-ownership is when more than one applicant takes on the financial responsibility of owning a property together. Co-ownership can take on many forms. Obviously owning a home with your spouse or life partner is the most common form of co-ownership, while having your parents co-sign on a mortgage is another. But for the sake of this article, let’s think past these arrangements.

Did you know that there are really no limitations with whom you can purchase a property? This is assuming they meet the lending criteria.
Maybe a brother, sister, cousin, neighbour, co-worker, friend, your mechanic, financial advisor, or some distant relative just happens to be looking to get into the housing market as well? There is a good chance that by combining your incomes together, you will qualify for a mortgage that neither of you would qualify on your own. Bringing someone else into the picture, or even a group of people, can significantly increase the amount you qualify to borrow on a mortgage. Most lenders will accept up to four applicants on a mortgage, while some lenders have even gone as far as launching products designed to make buying with friends and family easier. Buying a property with someone(s) in a co-ownership arrangement is becoming way more commonplace.

However, before making the decision to buy a house with someone, there is no doubt going to be a list of things you are going to want to work through. You will want to get everything out in the open and ask yourself questions like…

• Do I trust this person?
• Can I live with this person?
• Am I comfortable making decisions about the home with this person?
• How will conflict be managed when it arises?
• What happens if either party runs into financial trouble?
• What is the exit plan?

The more you work through ahead of time, the better chance you have at successfully co-owning a house with someone. A lot of people who purchase a property in a co-ownership agreement treat it like a business arrangement.
If you’d like to talk more about what this would look like for you personally, please don’t hesitate to contact a Dominion Lending Centres mortgage specialist. They can walk you through the process step by step and get you (and your partner in real estate) the best mortgage available to you!

Shari Letsos
Senior Mortgage Professional
Cell: 604-723-7721
www.Shariletsos.ca

Sletsos@dominionlending.ca
Dominion Lending Centres Mountain View

What usually follows once someone hears the term “Monoline Lender” for the first time is a feeling of suspicion and lack of trust. It’s understandable, I mean why is this “bank” you’ve never heard of willing to loan you money when you’ve never banked with them before?

In an effort to help you see the benefits of working with a Monoline Lender, here is some basic information that will help you understand why you’ve never heard of them, why you want to, and the reason they are referred to as lenders, not banks.

Monoline Lenders only operate in the mortgage space. They do not offer chequing or savings accounts, nor do they offer investments through RRSPs, GICs, or Tax-Free Savings Accounts. They are called Monoline because they have one line of business- mortgages.

This also plays into the reasons you never see their name or locations anywhere. There is no need for them to market on bus stop benches or billboards as they are only accessible through mortgage brokers, making their need to market to you unnecessary. The branch locations are also unnecessary because you do not have day-to-day banking, savings accounts, investment accounts, or credit cards through them. All your banking stays the exact same, with the only difference of a pre-authorized payments coming from your account for the monthly mortgage payment. Any questions or concerns, they have a phone number and communicate documents through e-mail.

Would it help Monoline Lenders to advertise and create brand awareness with the public? Absolutely. Is it necessary for them to remain in business? No.

Monoline Lenders also have some of the lowest interest rates on the market, the most attractive pre-payment privileges, and the lowest pre-payment penalties, especially when compared to a bigger bank like CIBC or RBC. If you don’t think these points are important, ask someone whose had a mortgage with one of these bigger banks and sold their property before their term was up and paid upwards of $12,000 in penalty fees. An equivalent amount with a Monoline Lender would be anywhere from $2,000-$4,000 in fees.

Monoline Lenders are not to be feared, they should be welcomed, as they are some of the most accommodating and client service-oriented lenders around! If you have any questions, don’t hesitate to call your local Dominion Lending Centres mortgage professional.

Shari Letsos
Senior Mortgage Professional
Cell: 604-723-7721
www.Shariletsos.ca

Sletsos@dominionlending.ca
Dominion Lending Centres Mountain View

Once your mortgage has been funded by your lender, you need to decide on how frequently you want to make your mortgage payments.

Most people want to pay off their mortgage as quick as possible to save paying interest.

We’ll discuss various mortgage payment options and then do the math by crunching mortgage numbers, keeping in mind: the longer it takes to pay off your mortgage, the more interest you pay.

Monthly: Most people’s typical payment option. Monthly payments will have the lowest payments therefore your mortgage will be paid off the slowest. For many people this is the most comfortable option, since it’s only one payment a month to plan for.
Bi-Weekly: Take your monthly mortgage payment multiply by 12 for a year, then divide by 26.
• You will make a mortgage payment every 2 weeks for a total of 26 payments per year.
• This will not help to pay your mortgage off any sooner than regular monthly payments.
Semi-Monthly: You make payments twice a month for a total of 24 payments a year.
• This will not help to pay your mortgage off any sooner than regular monthly payments.
Weekly: Take your monthly payments, multiply by 12 for a year, then divide by 52 weeks.
• This will not pay down your mortgage any sooner than regular monthly payments.
Accelerated Bi-weekly: Your monthly payment divided by 2.
• This option creates 2 extra bi-weekly payments a year, meaning you would be making 13 monthly payments a year (instead of 12). The two extra payments go directly to paying down the principal on your mortgage.
Accelerated Weekly: Your monthly payment divided by 4.
• This option creates 4 extra weekly payments a year, meaning you would be making 13 monthly payments over a year (instead of 12). The 4 extra payments go directly to paying down the principal on your mortgage.

I’ve crunched mortgage numbers by putting together a table using:
• $250,000 mortgage
• Mortgage rate 2.99%
• 5-year term
• Compounded semi-annually
• 25-year amortization
You can see how choosing the accelerated option pays your balance down a lot faster than regular payments.

Mortgages are complicated…  Don’t try to sort all this out on your own.  Call a Dominion Lending Centres mortgage specialist and let’s figure out what your best mortgage option will be!

Shari Letsos
Senior Mortgage Professional
Cell: 604-723-7721
www.Shariletsos.ca

Sletsos@dominionlending.ca
Dominion Lending Centres Mountain View

2017 was a year of change for the Canadian Mortgage Market. With the announcement of the B-20 guideline changes requiring all insured or uninsured mortgages to undergo stress testing. In addition, the removal of mortgage bundling and the continued rate rises from the Bank of Canada have led to significant changes in mortgage rates.

This raises the question: what does 2018 hold? While we cannot be 100% certain, based on predictions and summarizing stats from various corporations, we are able to put together a strong prediction of what 2018 will hold.

The Real Estate Market

As a whole, the Canadian real estate market is expected to see a 5.3% drop in national sales due in large part to the new OSFI guidelines (CREA). With this, there is an expectation of minimal growth for home prices at just 1.9% vs. the 8.5% gain seen in 2017. This is due again to the heightened stress testing procedures.

In addition, the sales of condos and townhomes are expected to increase with new developments of multifamily complexes reaching an all-time high, and the demand for smaller, more affordable houses increasing.

So, what does that mean for home prices? CMHC predicts that the average home price is to increase from a range of $493,900-$511,300 in 2017 to a range of $499,400-$524,500 by 2019.

Essentially, the market is going through a period of increased demand for condos and townhomes, leading to potential price increases. In relation to the detached home market, there will be slight price increases, but nothing compared to the growth that was seen in 2016-2017. There is an ongoing trend for homebuyers based in Vancouver and the Fraser Valley to contentedly sit by the sidelines as they save up for a larger down payment before purchasing-further increasing condo ownership and driving demand for rental properties as well.

The Economy

The Canadian Economy has been growing and surging forward through most of 2017. In the four quarters from the second half of 2016 to the first half of 2017, the Canadian Economy grew on average each quarter by 3.6%. Further, despite a slight slowdown in the second half of 2017, there was a rise in employment Canada wide, posting the annual real GDP growth over 3% in 2017. It was a substantial year for the Canadian economy in 2017 and this growth was directly seen in the real estate and housing market.

As many are aware, to stabilize the economy and ensure balance remains, the Bank of Canada began raising interest rates in 2017 and has plans to continue to do so in 2018. This rise in interest rates serves to steadily and slowly stunt the growth of the economy in Canada. Coupled with the ongoing trade disputes, the Canadian economy is forecasted to slow overall, but will still post an above-trend 2.2% of growth in 2018.

The Mortgage Market

So, what does all of the above mean for the mortgage industry and its rates? Well, with the predicted increase in rates from the Bank of Canada it is safe to say that the mortgage rates will follow.

CMHC summarized that the expected interest rate increase over the near-term horizon will bump the posted 5-year mortgage rate to lie within 4.9% and 5.7% in 2018. For 2019 that number increases to 5.2%-6.2% range*

In layman’s terms, the rates are likely to continue to rise alongside the Bank of Canada’s increases. It is important to keep in mind that with planning and budgeting these rates can easily be taken on by the average consumer. A key thing to keep in mind is that a 0.25% rate increase works out to only $13.00/100k increase in your payment. Another fact is that every lender is different in how they will calculate this change. Your mortgage product is unique and may be affected differently than another.

Since the new changes have rolled out there has been a slight decline in consumer demand. As the changes continue to take effect and the potential for more rate increases continues, it becomes more apparent we will continue to see a shift in the mortgage and real estate market.

However, by choosing to work with a Dominion Lending Centres mortgage broker you are guaranteed to work with someone who has an in-depth understanding of both the changes and the market. They will work alongside you to find the best possible solution to get you the sharpest rate.

Shari Letsos
Senior Mortgage Professional
Cell: 604-723-7721
www.Shariletsos.ca

Sletsos@dominionlending.ca
Dominion Lending Centres Mountain View