22 Mar


Mortgage Tips

Posted by: Nicolas Parato

Your credit history is an important component of the mortgage application process. It provides the lender with a snapshot of how well you service your debt and uses many different factors to determine an overall score. Below are three tips for building a healthy credit.

1. A Healthy Credit Balance

Always reaching your credit limit can become dangerous if you are not in the position to pay down the debt immediately. Going as high as 50% of the available credit limit is more than ok. However, constantly reaching or exceeding your limit without paying it down tells other lenders that you are potentially abusing your available credit and/or are unable to pay down your debts. In addition to this, If you cannot pay it off quickly, you run the risk of exceeding your limit with interest charges.

Instead, a solution to building a healthy credit is to diversify your debt load by having more than one card. Diversifying your debt load and making minimum payments demonstrates that you are able to service more than one debt obligation and decreases your debt utilization which positively contributes to the overall status of your credit score. With this in mind, it is highly recommended that you avoid spending beyond your means and only spend what you currently have.

2. Making Minimum Payments

Missing minimum payments on your credit card(s) can severely harm your credit score over time. It tells the lender that you are unable to service your current debt load and makes you more susceptible to higher interest rates because you are considered to be a higher risk. Most people do not realize this until they are looking to be approved for a larger loan such as a mortgage.

To avoid missing them, we recommend automating your minimum payments through your bank. Most lenders offer a feature to transfer funds from your account on a set date each month to pay a bill. You can set this up at your local branch or online. If you have a set amount that you put on your card each month, you can calculate your minimum payment (or more) and automate it through your bank. You can then tackle your debt when you choose while building your credit.

3. Creating a Payment Plan

If you are trying to pay down additional and heavier debt obligations, such as a PLC (Personal Line of Credit) or maxed credit cards, creating a prepayment plan for yourself would be a great option. Organize your debts by outlining what you owe and making sure payments are up to date. You can then tackle debts that have higher interest rates and require your immediate attention.

Another option can also be to consolidate other debts with your mortgage. With consolidation, you are adding your additional debt to your mortgage freeing up the additional available credit. The prepayment privileges outlined in your mortgage agreement will offer the ability to make additional payments on the entire mortgage which now contains your additional debt. Moreover, the interest rate on a mortgage (secured debt) is lower than unsecured debt such as credit cards are personal lines of credit. This can make a significant difference in how much money you are contributing to actually paying down your principal debt.

If you have any further questions or concerns regarding a mortgage for your home or the contents of this article, feel free to contact me by phone or email. I would be more than happy to assist you!

9 Mar



Posted by: Nicolas Parato

What you need to know before you renew your mortgage could save you thousands of dollars. Is your mortgage on your home or other properties maturing in 2018?

Typically you will receive your mortgage renewal notice from your current lender 3-4 months in advance of the renewal date. Sometimes you may receive an offer for early renewal. Either way, always reach out to your Dominion Lending Centres mortgage broker to find out your options and what you need to know before your renew your mortgage.

With the new mortgage rules in effect in October/November 2016 and subsequent changes January 1st 2018 it is more important than ever to know your options before you sign a renewal.

Did you know…?

  • If your current mortgage is funded before October 2016, regardless if you were a high ratio borrower or conventional borrower, the old rules for qualifying still apply
  • If you want to renew your mortgage at best rates you can transfer that mortgage to another lender without qualifying under the new rules
  • If you have any fees for transferring the mortgage they may be covered
  • Lenders are currently offering high renewal rates as they know 65%+ of borrowers will simply sign without doing any homework
  • Lenders are currently offering lower rates only after clients decline their first offer. Doesn’t seem fair does it?

Mortgage brokers have access to lots of great renewal programs from the banks, mortgage companies and credit unions.

Be informed before your mortgage renewal. Consult with an independent mortgage broker to review your financing needs for all of your properties and to set a plan well in advance of any mortgage renewal. If you are looking to make any large purchases such as investments, real estate, an automobile— know your options and the impact of these purchases on your financial situation