Buying a home is one of the most exciting ventures in life! To ensure it goes smoothly, you need to have a proper budget in place to protect your financial security and help you make the best decision for your future location. However, the cost of the home is not the only cost that you need to budget for! The temptation will always be to start looking at the very top of your budget but fees, such as mandatory closing costs, can easily put you over the top. Knowing the real numbers will make it that much easier to stay within your budget and maintain your financial comfort.

Closing costs are a one-time fee associated with the sale of a home and are separate from the mortgage insurance and down payment. Typically, these costs range from 1.5-4% of the purchase price, depending on your location. This means, for an $800,000 home, you would be looking to budget around $22,000 on average.

Here are a few closing costs to keep an eye out for:

• Land Transfer Tax: This is calculated as a percentage of the purchase price of your home, with the amount varying in each province. Some cities, such as Toronto, also have a municipal LTT.
• Legal Fees and Disbursements: You can expect to incur a minimum of $500 (plus GST/HST) on legal fees for the preparation and recording of official documents around your purchase.
• Title Insurance: Most lenders require title insurance to protect against losses in the event of a property ownership dispute. This is purchased through your lawyer/notary and is typically $300 or more.
• PST on CMHC Insurance: Though CMHC insurance itself is financed through the mortgage, PST on the insurance is typically paid at the lawyers and sometimes deducted from your advance.
• Home Inspection Fee: A home inspection is highly recommended as a condition of your Offer to Purchase to prevent any future surprises. This can cost around $500.
• Appraisal Fee: An appraisal is performed to certify the lender of the resale value of the home in the case you default on the mortgage. The cost is usually $400 – $600 but is typically covered by the lender.
• Property Insurance: Property insurance covers the cost of replacing your home and its contents, and must be in place on closing day. This is paid in monthly or annual premiums.
• Prepaid Utility Bills: You may need to reimburse the previous owner of your property for prepaid costs such as property taxes, utilities, and so forth.
• Property Taxes: Property taxes are due on an annual basis and are calculated as a percentage of the home value and vary by municipality. You also may need to reimburse the previous property owner if he/she has already paid property taxes for the full year.

Knowledge is power and understanding the hidden costs associated with purchasing a home can help you create a realistic budget and ensure you remain within your financial means. Contact a DLC Mortgage Expert if you have any questions about your current purchase process or if you are looking to buy a new home now or in the future!

written by DLC Chief Economist Dr. Sherry Cooper.

Lowering your interest rate can save you money over the life of a loan or credit card. Here are some proven strategies to help you accomplish that:

1. Improve Your Credit Score: Lenders typically offer lower interest rates to borrowers with higher credit scores. Pay your bills on time, keep your credit card balances low, and avoid opening multiple new credit accounts to improve your credit score.
2. Negotiate with Your Current Lender: If you have a good payment history with your current lender, they may be willing to lower your interest rate rather than lose you as a customer. Contact them and inquire about any available rate reduction programs.
3. Shop Around: Don’t settle for the first offer you receive. Compare interest rates from multiple lenders to find the best deal. You can do this by obtaining quotes online or visiting different financial institutions in person. If you’re shopping for a mortgage, your DLC Mortgage Expert can help determine the best options for you!
4. Consider Refinancing: If you have a mortgage, auto loan, or personal loan with a high interest rate, consider refinancing to secure a lower rate. Keep in mind that refinancing often comes with fees, so be sure to calculate whether the potential savings outweigh the costs. Talk to your DLC Mortgage Expert about this today!
5. Increase Your Down Payment: When purchasing a home or car, a larger down payment can often result in a lower interest rate. Lenders see a higher down payment as a sign of financial stability, reducing the risk associated with lending to you.
6. Choose a Shorter Loan Term: Opting for a shorter loan term can sometimes result in a lower interest rate. While your monthly payments may be higher, you’ll pay less in interest over the life of the loan.
7. Consider a Balance Transfer: If you have high-interest credit card debt, transferring the balance to a card with a lower interest rate can save you money. Look for credit card offers with introductory 0% APR periods on balance transfers.
8. Demonstrate Stability: Lenders often consider factors such as employment history and income stability when determining interest rates. A steady job and consistent income can help you secure a lower rate.
9. Automatic Payments: Some lenders offer a small interest rate reduction if you sign up for automatic payments. This reduces the risk of missed payments, making you a more attractive borrower.

By implementing these strategies, you can potentially lower your interest rate and save money in the long run. Don’t forget to check with your DLC Mortgage Expert also about how to make your money work for you when it comes to your mortgage!

written by DLC Chief Economist Dr. Sherry Cooper.

If you’re seeking a mortgage, but your application doesn’t fit into the box of the big traditional institutions, you’ll find yourself in what’s commonly referred to in the industry as the “Alternative-A” or “B” lending space.

These lenders come in three classifications:

• Alt A lenders consist of banks, trust companies, and monoline lenders. These are large institutional lenders that are regulated both provincially and federally but have products that may speak to consumers who require broader qualifying criteria to obtain a mortgage.
• MICs (Mortgage Investment Companies) are much like Alt A lenders but are organized following the Income Tax Act with an incorporated lending company consisting of a group of individual shareholder investors that pool money together to lend out on mortgages. These lenders follow individual qualifying lending criteria but tend to operate with an even broader qualifying regime.
• Private Lenders are typically individual investors who lend their funds but can sometimes also be a company formed specifically to lend money for mortgages that carry a higher risk of default relative to a borrower’s situation.  These types of lenders are generally unregulated and tend to cater to those with a higher risk profile.

Managing mortgage affordability in the alternative lending landscape requires careful consideration of several factors to ensure financial stability and avoid potential risks. Here are some strategies to help:

• Assess Your Financial Situation: Evaluate your income, expenses, debts, and savings to determine how much you can afford to borrow. Consider your credit score and history, as alternative lenders may have different requirements than traditional lenders.
• Research Alternative Lenders: Review the abovealternative lending options with help from your Dominion Lending Centres mortgage expert. Compare interest rates, fees, terms, and eligibility criteria to find the best fit for your financial needs and situation.
• Understand Loan Products and Terms: Familiarize yourself with different types of mortgage products offered by alternative lenders, such as adjustable-rate mortgages (ARMs), interest-only loans, and balloon mortgages. Pay attention to the terms of the loan, including the interest rate, loan duration, prepayment penalties, and any potential changes to the monthly payment.
• Calculate Affordability: Discuss with your mortgage broker to estimate your monthly mortgage payment based on the loan amount, interest rate, and term. Consider other homeownership costs, such as property taxes, homeowners insurance, private mortgage insurance (PMI), and maintenance expenses, when calculating affordability to ensure you do not over-extend.
• Budget and Plan for the Future: Create a budget that accounts for your mortgage payment and other housing-related expenses while leaving room for savings and unexpected costs. Plan for potential changes in your financial situation, such as job loss, salary changes, or interest rate increases, by building an emergency fund and having a contingency plan.
• Get Pre-Approved: Obtain pre-approval through your mortgage broker to determine how much you can borrow and demonstrate your seriousness as a buyer. Be prepared to provide documentation of your income, assets, debts, and credit history during the pre-approval process.
• Seek Professional Advice: Consult with a Dominion Lending Centres Mortgage Expert who can provide personalized guidance and help you navigate the alternative lending landscape.

By carefully managing mortgage affordability, whether within alternative lending or traditional, you can make informed decisions that support your homeownership goals while mitigating financial risks.

written by DLC Chief Economist Dr. Sherry Cooper.

Summer is the time to get outside and enjoy your yard. To help you make the most of your space, I have broken down some of the top yard appeal ideas with the biggest ROI giving you the most bang for your buck and increasing your home’s equity and curb appeal at the same time!

• Embrace Sustainable Landscaping: Incorporating native plants, drought-resistant foliage, and xeriscaping techniques not only reduces water consumption but also creates an eco-friendly landscape. Consider installing a rain garden or a drip irrigation system to conserve water and enhance the natural beauty of your yard.
• Install Outdoor Structures: Adding functional outdoor structures like pergolas, arbors, or gazebos can provide shade, define spaces, and add architectural interest to your yard. These structures can serve as focal points and create inviting outdoor living areas for entertaining or relaxation.
• Upgrade Your Lawn: A lush, well-maintained lawn instantly elevates the appearance of your yard. Invest in professional lawn care services, aerate and overseed to fill in bare patches, and regularly fertilize and water your lawn to keep it healthy and green. Consider alternatives like artificial turf for low-maintenance options.
• Incorporate Water Features: Incorporating a water feature such as a fountain, pond, or waterfall adds visual interest, tranquility, and a sense of luxury to your yard. The soothing sound of running water can create a serene ambiance and attract wildlife, enhancing the overall appeal of your outdoor space.
• Enhance Privacy: Increase the comfort and enjoyment of your yard by enhancing privacy with strategic landscaping, fencing, or screening options. Planting tall hedges, installing lattice panels, or adding trellises with climbing plants can create secluded areas and block unsightly views while adding beauty and greenery to your yard.

By implementing these additional ideas alongside the ones you’ve already outlined, you can transform your yard into a welcoming oasis that not only enhances your enjoyment but also offers a significant return on investment

With the continued rise of inflation, interest rates and the overall cost of living, the uncertainty can be unnerving for many individuals. But don’t fret! We have some tips and suggestions to help you manage your financial stress and help you to power through these latest economic changes:

1. Prioritize What You Can Control: It can be easy to feel like you have no control over your financial situation, especially with the economy in flux. However, dwelling on things you cannot fix will only cause more stress. Instead, we recommend focusing on what you CAN control within your situation. For instance, take a looking at your phone bill and services to see if you can reduce the cost (even temporarily), reviewing your grocery bill and looking for places to switch to cheaper brands or alternatives, perhaps buying in bulk. You’ll not only save money, but you will feel like you have more control and help reduce stress.
2. Pay Essential Bills: If you are struggling to pay your monthly bills, prioritizing them can help you gain some control. Knowing which bills are most important to pay first can help reduce anxiety as you’re not scrambling to decide what to do. In some cases, prioritizing your bills can also help you uncover unnecessary spending and you may find something that can be eliminated entirely (even temporarily).
   
3. Automate Payments and Savings: If you’re struggling to keep up with your bills and payments, or are finding that you keep saying you’ll save money, but aren’t, considering automation for your finances can be a step in the right direction. Ensuring that your bills are paid on time will help reduce stress and protect you from wasting money on penalties for missed payments. Alternatively, you can also set up automatic money transfers on the days you are paid to move funds into a separate, savings account before you even see it. Thereby, reducing the likelihood that you’ll skip on adding to your savings that month or use that money elsewhere.
   
4. Find Ways to Earn More Money: When cashflow is a problem and you are feeling the strain of trying to afford your current lifestyle, looking for ways to earn additional money can be a lifesaver! Consider part-time work for the weekends, consulting in your area of expertise or picking up extra hours at your current place of work. Now is also a great time to discuss with your manager if you are due for a raise.
   
5. Talk to Your Mortgage Professional: For most people, their mortgage is their largest monthly bill. If you are feeling the financial crunch, now is a great time to talk to your mortgage broker about potentially changing your payment schedule or even looking for a different mortgage product with better rates (ideally if you are at the end of your term). Do not hesitate to be honest about your situation and ask what your options are.

Regardless of where you find yourself financially, there are often many solutions to help reduce and resolve your stress and ensure that you have healthy monthly cashflow.

written by DLC Chief Economist Dr. Sherry Cooper.

Curious about the CHIP Reverse Mortgage by HomeEquity Bank? If you’re a Canadian aged 55 or older, this financial solution could hold the key to tapping into your largest asset, your home. It’s a unique opportunity that allows you to use your home equity for various purposes, from paying off debts to funding home renovations or supporting your loved ones financially. But what exactly is the CHIP Reverse Mortgage, and how does it work? Let’s dive into the details.

What is the CHIP Reverse Mortgage?

Maybe you’ve wondered, “What is the CHIP Reverse Mortgage?” The CHIP Reverse Mortgage is a loan secured against the value of your home and is only available for Canadians 55+. It allows you to unlock up to 55%¹ of the value of your home without having to sell or move. The money you receive is tax-free, and you can use it towards any of your personal needs, such as:

• Pay off debts/Consolidate debt
• Home renovations and repairs
• Unexpected expenses (medical, emergency)
• Financially aid your children/grandchildren
• Improve or maintain your standard of living
• Pay for a vacation or a special purchase

Eligibility 

To be eligible for the CHIP Reverse Mortgage, you must meet the following criteria:

• Canadian Homeowner: You need to be a homeowner in Canada to consider this financial solution.
• Age Requirement: Both you and your spouse must be at least 55 years of age.
• Primary Residence: The property in question should serve as your primary residence.
• Home Maintenance: You must maintain the property well, pay your property taxes and insurance, and ensure it is not in default.
• Property Type: Property must be a single family dwelling, detached duplex, triplex, quadruplex, link home, semi detached, townhouse / row house, condo – townhouse/ stacked townhouse, or condo – apartment style

If you meet these criteria, you can unlock tax-free cash with the CHIP Reverse Mortgage in an initial lump sum or scheduled monthly advances when needed.

Why Tap into Home Equity with The CHIP Reverse Mortgage 

1. Keep your home and maintain ownership of your property: Frequently, people think the bank takes ownership of their home when they get a reverse mortgage. This is not true. HomeEquity Bank lends you a tax-free cash amount based on your home’s value, but you retain ownership of the property. However, you’re responsible for paying property taxes and maintaining the home’s condition.
2. No regular monthly payments required: A key perk of the CHIP Reverse Mortgage is that there are no monthly payments. When you eventually move, sell, or pass away, the reverse mortgage, including interest and principal, is repaid from the proceeds of the home’s sale.
3. Choose how you plan to spend the money: One of the most significant benefits of the CHIP Reverse Mortgage is that you completely control the loan and can spend it on whatever needs you require.
4. The money borrowed is tax-free and does not affect your government benefits: Because you are unlocking home equity, the funds received from the CHIP Reverse Mortgage are not added to your taxable income and do not affect government benefits such as Old Age Security (OAS).
5. You will never owe more than the value of your home: The CHIP Reverse Mortgage has a No Negative Equity Guarantee², which means that if you meet your property taxes and mortgage obligations, HomeEquity Bank guarantees that the amount owed on the due date will not exceed the fair market value of your home. If the house depreciates and the mortgage amount owing is more than the gross proceeds from the sale of the property, HomeEquity Bank covers the difference between the sale price and the loan amount.

The CHIP Reverse Mortgage offers Canadians aged 55 and better a flexible and secure way to access their home equity without selling or moving. With no monthly payments required and the ability to use the funds for various purposes, it provides financial freedom and peace of mind. If you’re considering unlocking the value of your home, contact your Dominion Lending Centres mortgage expert to learn more about the CHIP Reverse Mortgage solution.

¹Some conditions apply.

²As long as you keep your property in good maintenance, pay your property taxes and property insurance and your property is not in default. The guarantee excludes administrative expenses and interest that has accumulated after the due date

written by DLC Chief Economist Dr. Sherry Cooper.

Technology is constantly evolving and adapting to our needs as a society and individuals. One of these exciting developments has been the creation and evolution of smart homes.

WHAT IS A SMART HOME?

A smart home is any home where the homeowners are able to control thermostats, lighting, appliances and other devices remotely over the internet through a smartphone or tablet. These can be set up through wired or wireless systems, allowing you full control wherever you are.

BENEFITS OF SMART HOMES

• Easy Home Management: One of the biggest and most appealing aspects of a smart home is the easy home management it provides. The integrated systems not only give you full control over every smart aspect of your home, but also allows you to view insights and data, which can help you analyze daily habits and energy use.

• Energy Savings: Smart homes provide opportunity for extensive energy efficiency and cost savings, depending on how you use the technology. Precise control over heating and cooling systems allows the system to learn your schedule and set preferences for the highest energy efficiency outcome. In addition, you can manage lighting to turn on and off at specified times to prevent energy waste. In addition, these homes are often stocked with top of the line appliances and electronics, with improved energy efficiency leading to further cost savings.

• Increase Appliance Functionality: Using smart appliances and electronics allows you to get even more out of these household tools. For instance, a smart oven can help you cook your chicken to perfection and a built-in audio system can provide the perfect atmosphere to any party. Plus, connecting your appliances and other systems will improve automation and give you even more to love about your home.

• Flexibility: With the ever-changing smart home technology, this affords you greater flexibility when it comes to your home and your changing needs.Smart homes are typically highly flexible, allowing you to easily swap out old models for updated versions, or to install new technology seamlessly.

• Improved Home Security: Incorporating security and surveilliance features, such as cameras, into your smart home network will help you maximize your home security. There are various options for home automation systems containing motion detectors, automated locks and surveillance cameras so that you always know what is going on. You can even set it to receive security alerts in real time!

• Growing Industry: Another advantage to smart homes is that this is a growing industry with technology that is constantly being worked on and improved. This means bigger and smarter tech will be available in the coming years, allowing for even greater cost savings, automation and control.

CONSIDERATIONS FOR SMART HOMES

I bet you are probably pretty excited now that you know what smart homes can do! However, before you jump in there are a couple considerations to keep in mind.

1. How much automation do you want/need?
2. What systems are most important to you (lighting, audio, climate, security, etc)?
3. What is your budget?
4. What are your future plans?

With the right preparation, a smart home can be a dream come true. It is important to understand how much technology you are comfortable with, and what systems are most important to you, so that you can create a plan and a budget to upgrade your current home – or so you know what to look for when you begin shopping.

Smart technology has come a long way! Smart homes are already incredibly intuitive and automated, with more technology and advancements to come. While some of us will always remain the “labor of love” type, many of us have less time and energy than we used to. Smart homes not only help save you money, but time and energy too so you can focus on more important things.

written by DLC Chief Economist Dr. Sherry Cooper.

Your mortgage amortization period is the number of years it will take you to pay off your mortgage. Depending on your choice of amortization period, it will affect how quickly you become mortgage-free as well as how much interest you pay over the lifetime of your mortgage (a longer lifetime equals more interest, whereas a shorter lifetime equals less interest but also bigger payments).

Amortization Benchmarks
Let’s start by looking at the mortgage industry benchmark amortization period. This is typically a 25-year period and is the standard that is used by the majority of lenders when it comes to discussing mortgage products. It is also typically the basis for standard mortgage calculators. While this is the standard, it is not the only option when it comes to your mortgage amortization. Mortgage amortizations can be as short as 5 years and as long as 35 years!

Benefits of a Shorter Amortization
Opting for a shorter amortization period will result in paying less interest overall during the life of your mortgage. Choosing this amortization schedule means you will also become mortgage-free faster and have access to your home equity sooner! However, if you choose to pay off your mortgage over a shorter time frame, you will have higher payments per month. If your income is irregular, you are at the maximum end of your monthly budget or this is your first home, you may not benefit from a shorter amortization and having more cash flow tied up in your monthly mortgage payments.

Benefits of a Longer Amortization
When it comes to choosing a longer amortization period, there are still advantages. The first is that you have smaller monthly mortgage payments, which can make home ownership less daunting for first-time buyers as well as free up additional monthly cash flow for other bills or endeavors. A longer amortization also has its advantages when it comes to buying a home as choosing a longer amortization period can often get you into your dream home sooner, due to utilizing standard mortgage payments versus accelerated. In some cases, with your payments happening over a larger period, you may also qualify for a slightly higher value mortgage than a shorter amortization depending on your situation.

Let’s Chat!
We would be happy to help with the decision for the amortization that best suits your unique requirements and ensures you have adequate cash flow. However, it is important to mention that you are not stuck with the amortization schedule you choose at the time you get your mortgage. You can shorten or lengthen your amortization, as well as consider making extra payments on your mortgage (if you set up pre-payment options), at a later date.

Ideally, you are re-evaluating your mortgage at renewal time (every 3, 5, or 10 years depending on your mortgage product). During renewal is a great time to review your amortization and payment schedules or make changes if they are no longer working for you.

If you have any questions or are looking to get started on purchasing a home, don’t hesitate to reach out to a DLC mortgage expert today!

written by DLC Chief Economist Dr. Sherry Cooper.

Fall in love with your home and your workspace again with these tips to help you make your home office space more productive!

1. Establish Boundaries: A key component of being more productive at home is to establish proper boundaries between work and personal life. While not all of us at home have space for a dedicated home office, it helps to create a dedicated area in your house such as your kitchen table. In addition to having a dedicated physical space to create boundaries, establishing when it is time to focus on work versus switching off for the day is key. Establishing norms such as time and location can make a big difference in ensuring productivity, but ensure you have discussed with your manager and/or team about when communication is expected.
2. Create a Routine: This is especially important for individuals who are used to an office setting and whose mornings would consist of showering, breakfast and commuting. When the commute is off the table, it is just as important to maintain a good morning routine – even if you have the option of more flexible hours. Determine what works best for you to keep you focused and engaged and maintain that routine throughout the week.

3. Declutter: When working at home, you no longer have to account for just your immediate space but the general environment as well. It can be distracting to try and work at the kitchen table when your sink is a mess or the carpet needs vacuuming. Be sure to keep your house as decluttered and tidy as possible to prevent mid-day distractions and to clear your mind to better focus on work-related tasks.

4. Take Breaks: When working in an office, you’ll often be reminded to take your lunch break when the rest of your colleagues are headed out for theirs. At home, it can be a little more difficult to maintain your lunch hour – or take breaks at all! And when we do, often these breaks are little more than scrolling through social media. While taking breaks is vital, a productive break is even more so. Consider reading relevant articles to give you some inspiration, making a home cooked meal or even taking a walk around your block for a more restful break.
5. Upgrade Your Equipment: Whether you’re currently working in an old wooden kitchen chair or lack proper wrist support, a big step towards being more productive at home is upgrading your equipment. If you’re going to be sitting all day, investing in a comfortable, supportive desk chair that won’t leave you feeling achy will make a huge difference! Also, make sure you have enough desk space to be able to work comfortably and include ergonomic support where applicable for an even more comfortable (and productive!) work-at-home experience.

written by DLC Chief Economist Dr. Sherry Cooper.

“New Year, new you” may be a cliché but it is for a reason! The New Year always has us thinking about where we are now, and where we want to end up. When it comes to your personal goals, a review of your finances and estate should be at the top of your list. Proper estate planning can ensure that you have a stress-free year knowing you are covered!

Is your will up-to-date?

The purpose of a will is to outline your assets and determine how they will be distributed, as well as who will be in charge of managing affairs. Some key components to include in this document are:

• Up-to-date list of your significant assets; note the location if outside your province or outside Canada.
• Who will inherit your assets? And which?
• Outline of where you want assets to pass outside your estate to avoid probate fees (e.g., an insurance policy, an RRSP)? Do this via beneficiary designation.
  • If they are minors, do you have a trust or other provisions in place?
• Is the list of beneficiaries in your will up to date? Have there been recent births, deaths or marriages in your family?
• Have you included alternates in case your named beneficiaries predecease you?
• Do you want to give to charities or other organizations?
• If you have children, have you indicated a guardian and spoken to them?
  • Did you include an alternate in case the guardian you chose is unable to commit?
  • Have you reviewed your choice of guardian as your child grows older?
• Your executor who will carry out your wishes after you die. You can name one executor or two or more co-executors. Be sure to name one or more alternates as well.

Have you assigned a power of attorney?

Another important (and often overlooked!) aspect of estate planning involves naming a power of attorney. This individual is someone you trust to make decisions for you should you become unable to do so due to injury or illness, whether temporary or otherwise.  Power of attorney documents are created for you by a wills and estates lawyer (or notary in Quebec) as part of your estate plan.

Do you have mortgage protection insurance?

Through Manulife Mortgage Protection Plan (MPP), you have the opportunity to add a portable insurance policy to your mortgage that helps protect your loved ones and your home should something unexpected happen to you.  Unlike bank insurance, MPP is a portable life and disability product that you can take with you, from lender to lender and property to property.  This gives you the utmost future flexibility and is unlike bank insurance products which tie you down exclusively to them.  To ensure you get the best rate at renewal, you must have invested in an insurance product like MPP that will give you the freedom to move!

Mortgage life insurance will protect your family’s future by paying out your mortgage should the mortgage holder pass away. Manulife will also make your mortgage payments while your claim is being adjudicated, so there is no added stress for a loved one at an already difficult time.  Mortgage disability insurance will take care of your mortgage payments plus property taxes if you become disabled.  Disabilities from sickness and accidents are relatively common and will affect 1 in 3 borrowers throughout their mortgage amortization.  Manulife provides budget-friendly payment options, the ability to top-up your coverage and so much more.

These are all important aspects to consider to ensure your estate and family will be provided for should something happen. While never a fun topic, it is an important one and the better prepared you are, the better off your loved ones will be.

written by DLC Chief Economist Dr. Sherry Cooper.