13 May

Purchasing a Rental Property – Your Barrie Mortgage Professional


Posted by: Ben Oakes

Investment Properties in Canada

Buying an investment property is a popular option for Canadians looking at different ways to invest their money. However, unlike the mortgage you took out on your principal residence, financing an investment property is a little more complex. The number of units in the building and whether or not you’ll be occupying one of the units are the two major components that control what your financing will look like. Let’s take a look at how investment property mortgages work in Canada.

Investment Property Mortgages

When you start shopping around for an investment property, the first thing you need to consider is the number of units your building will have. Most buildings with 1-4 units are zoned residential, so the qualification criteria and financing options from lenders are only slightly more difficult than that of a mortgage similar to what you have on your principal residence. However, buildings with 5 or more units are zoned commercial, so a lender would require that you take out a commercial mortgage on it. With a commercial mortgage, the qualification criteria is even tougher to meet and interest rates are often much higher.

If it’s a multi-unit property, the second thing to consider is if you, the owner, will be living in one of the units or not. If you will be occupying one of the units, the property would be considered owner-occupied. If all of the units will be rented out, your property would be considered non-owner occupied. The major difference between the two is how much of a down payment you need to make.

Since April 19th, 2010, Canadians have been required to make at least a 20% down payment on non-owner occupied investment properties. Use the following chart to see the minimum down payment both owner and non-owner occupied investment properties require.

Units Owner-Occupied? Down Payment Max Loan-to-Value
1-2 Yes 5% 95%
1-2 No 20% 80%
3-4 Yes 10% 90%
3-4 No 20% 80%

As you can see, non-owner occupied investment properties require at least a 20% down payment. However, if you plan on living in one of the units, you can put down as little as 5-10%, depending on the total number of units in your property. 

Investment Property Mortgage Rates

So long as you meet the qualification criteria and can make at least the minimum down payment on your investment property, you should qualify for the same mortgage rates and terms as you see on my site – these include fixed, variable and adjustable rate mortgages.

It’s important to note, however, that some smaller lenders don’t offer investment property mortgages at all – that is, unless you are going to occupy one of the units. If you can find a smaller lender to work with, be prepared for them to add a small premium to the mortgage rate, such as +0.30 per cent.


Reposted from RateHub

8 May

Credit Score Basics – Knowledge Is Power! – Your Barrie Mortgage Professional


Posted by: Ben Oakes

What is a credit score?

A credit score is a three-digit number that is calculated using a mathematical formula based on the information in your credit report. You get points for actions that demonstrate to lenders that you can use credit responsibly. You lose points for things that show you have difficulty managing credit. To find out what counts toward your credit score, see page 16.

In Canada, credit scores range from 300 to 900 points. The best score is 900 points.

Lenders and credit reporting agencies produce credit scores under different brand names, such as Beacon, Empirica and FICO®.

Your score will change over time as your credit report is updated.

Businesses use your credit report and score to see how risky it would be for them to lend you money. It is up to each lender to decide on the lowest score you can have and still borrow money from them. Lenders may also use your score to set your interest rate and credit limit. If you have a high credit score, you may be able to get a lower interest rate on loans, which can save you a lot of money over time.

While they are very important, credit scores are usually not the only thing a lender will look at. Often, they will also consider other factors, such as your income, job or any assets you own.



The actual formulas used to calculate credit scores are the property of private companies and are not available to the public. This means it is not possible to know exactly how many points your score will go up or down based on the actions you take.

However, the main factors that are used to calculate your score include:

• payment history

• use of available credit

• length of credit history

• number of inquiries

• types of credit.



1. Payment history

This is the most important factor for your credit score. It shows:

• when you paid your bills

• late or missed payments

• debts you did not pay that were written off or sent to a collection agency

• whether you have declared bankruptcy.


Your score will be damaged if you:

• make late payments—the longer it takes you to make your payment, the worse the impact on your credit report and score will likely be

• have accounts that are sent to a collection agency

• declare bankruptcy

• withhold payments due to a dispute and the lender reports your payments as late.

With certain financial products, any payments you make on time will not be counted and will notimprove your credit score. However, if you miss payments and your account is sent to a collection agency, this can be included and will damage your credit score. These products include:

• chequing and savings accounts

• student loans

• prepaid cards (these are not the same as secured credit cards).

Telecommunications accounts, such as mobile phone and Internet, are exceptions. Payments you make on time as well as late payments may be considered for your credit score.


To improve your credit score

• Always make your payments on time. If you cannot pay the full amount, make at least the minimum payment.

• If you think you will have trouble paying a bill, contact the lender right away. See if you can work out a special arrangement to repay your debt.


2. Use of available credit

This is the second most important factor. It is also called “credit utilization.”

To figure out your available credit, add up the credit limits for all your credit products, such as credit cards, lines of credit and other loans.

What counts toward your credit score is how much of your available credit you actually use, not your credit limits by themselves.

When you use a large percentage of your available credit, lenders see you as a greater risk, even if you pay your balance in full by the due date.


To improve your credit score

• Try to use less than 35 percent of your available credit. For example, if you have a credit card with a limit of $5,000 and a line of credit with a limit of $10,000, your available credit is $15,000. Try not to borrow more than $5,250 at any time (35 percent of $15,000).


3. Length of credit history

The longer you have had an account open and used it, the better it is for your score.

Your credit score may be lower if:

• you have credit accounts that are relatively new

• you close your older accounts and your remaining credit accounts are newer—for example, if you close a credit card account and transfer the balance to a new card.



To improve your credit score

• Consider keeping an older account open even if you no longer need to use it, especially if there is no annual fee. Use it from time to time to keep it active.


4. Number of inquiries

When lenders and others ask a credit reporting agency for your credit report, it is recorded as an inquiry. This usually happens when you apply for credit.

It is normal and expected to seek credit every so often. But if there are too many inquiries on your credit report, lenders may be concerned. It can seem like you are desperately seeking credit or that you are trying to live beyond your means without the ability to pay back the money you want to borrow.

“Hard hits” versus “soft hits”

Inquiries that are recorded on your credit report and count toward your credit score are sometimes called “hard hits.” Anyone who views your credit report will see these inquiries. An application for a credit card is an example of a “hard hit.” Rental and employment applications may be treated as “hard hits.”

“Soft hits” are the opposite. Only you can see “soft hits.” These inquiries do not affect your credit score in any way. Examples of “soft hits” include:

• requesting your own credit report

• businesses asking for your credit report to update their records about an existing account you have with them. They do this to see whether you qualify for promotions, credit limit increases and so on.

Will shopping around for a car or mortgage hurt my score?

When you are shopping around for a car or a mortgage, try to do it within a two-week period. All inquiries related to auto or mortgage loans made during this time are usually combined and treated as a single inquiry.


To improve your credit score

• Limit the number of times you apply for credit in a short period of time. It is a good idea to seek credit only when you really need it.


5. Types of credit

Your score may be lower if you only have one type of credit product, such as a credit card.

It is better to have a mix of different types of credit, such as a credit card, auto loan, line of creditor other loan. It can even help if you have a second but different type of credit card, such as an account with a store.


To help your credit score

• Having a mix of credit products could get you more points, but don’t go overboard! Make sure you can afford to pay back any money you borrow. Otherwise, you could end up hurting your score by taking on more debt than you can handle.


Reposted from Rob Carr -RMA

7 May

10 Reasons to use a Mortgage Broker – Your Barrie Mortgage Professional


Posted by: Ben Oakes

These days, everyhomeorcondobuyerin knows that, at a very minimum, they need to be pre-approved before shopping for a newhome.  But being pre-approved by the RIGHT lender is just as important.  With almost unlimited choices, between Banks,CreditUnions, private lenders and mortgage brokers, whats the best choice for today’s homebuyer?  Many are turning to a Mortgage Broker, for a variety of reasons.  Here are some very important ones to consider:

A home is the biggest purchase most of us will ever make.

And a mortgage can be a powerful financial tool. No surprise, then, that a growing number of Canadians have started to ask some smart questions about theirmortgage. In fact, more than 30% of all Canadian mortgages are now arranged through a mortgage broker, and almost 60 percent of first time home buyers. Why? Here are 10 great reasons:

1. Choice.

A mortgage broker has access to mortgages from a huge range of lenders – so their clients have by far the best choice of rates andmortgage options. With partnerships in a vast network of over 50 lending institutions, including banks, credit unions, trusts, national and regional lenders, and non-traditional lenders, your broker can help design the perfect mortgage for you.

2. Independence and objectivity.

A mortgage broker actually works for you, not for any one lender. That kind of objectivity means that you – the client – are the focus. They fit the mortgage to the client, not the other way around.

3. Negotiating power.

A mortgage broker has negotiating power because the lenders compete for their business. You’ll get the best rate for your situation.

4. Access to rate promotions.

You may not realize it, but there are sales and promotions in the mortgage world, too. Lenders often offer special rate promotions, for example. Your mortgage broker will know about thesespecial offers, and whether they might work in your situation.

5. Expertise.

An AMP-designated  broker is a financial specialist. That’s the kind of expertise you want to guide you through today’s plentifulmortgagemarket. With 35-year amortizations, re-advanceable mortgages (mortgage combined with aline of credit), no income documentation products for the self employed, credit repair and debt consolidation solutions, today there are mortgages for almost any situation. And your independent mortgage broker knows them all.

6. A focused specialist.

A mortgage is a very significant financial event. A mortgage broker is in only one business, and they do it exceedingly well. That’s what you want: someone who’s focused on the mortgage marketplace and your needs.

7. Rates.

Getting a lower rate can potentially save you thousands ofdollars. That’s why more homeowners are more likely to call a mortgage broker to check out their options for their first mortgage and at renewal.  Call early; your mortgage broker can usually guarantee an interest rate for 90-120 days.

8. One credit inquiry.

Rate-shopping on your own can actually be hazardous toyour credit. Every time a lender checks your credit, the credit bureaus take notice. Too many inquiries and your credit rating can weaken, possibly affecting the rate and terms of your mortgage. Your mortgage broker does one inquiry only, regardless how many lenders you’re looking at.

9. No cost to you (o.a.c).

As a rule, the winning lender pays compensation to your mortgage broker for the services and solution provided.

10. Personal attention.

You need a mortgage plan that is a custom fit for you, and a broker who keeps in touch with you during your mortgage years. Keep in mind that their business is built primarily through referrals from satisfiedcustomers, so your positive mortgage experience is essential for their ongoing business growth.  Your mortgage is a big decision and a powerful financial tool.

So if you are in the market for a new home, or need to re-finance a current home, consider using a mortgage broker to get the best deal possible. You wont regret it. 

#Winnipeg This article first appeared in Winnipeg’s Real Estate Blog and is copyright of Bo Kauffmann, REMAX.http://blog.winnipeghomefinder.com/top-10-reasons-to-use-a-mortgage-broker/

4 May

First-Time Home Buyer’s Down Payment Options in the Barrie Area – Your Barrie Mortgage Professional


Posted by: Ben Oakes

This is a little known Homeownership Program in Simcoe County (Barrie, Orillia, Innisfil, Alliston, Collingwood, Bradford, Midland, Wasaga Beach) that aims to assist low-to-moderate income earners who are currently renting to purchase a home.  The program will provide a 10% down payment in the form of a forgivable loan.

This program is designed to free up valuable rental units & encourage builders to develop affordable housing options in the area.

How do I qualify for the grant?

The Homeownership Program has been running for the last couple of years but the Program does seem to run out of funds fairly quickly after each funding announcement, so timing is very important!  Their website states, “Future funding details and specific program guidelines will be posted on our website in early 2014″.

The purchased home (re-sale or new) must be located in Simcoe County and cannot exceed a price of $291,814.  The down payment assistance loan is registered on title in second position for a period of 20 years.  The loan is forgiven after this period.  If the home is sold before the 20 years, the down paymentmust be repaid in full plus any realized capital gains.

Applicants must not own any other properties, have assets of no more than $20,000 and a gross household income of less than $82,600.  Potential candidates must also include a mortgage pre-approval with their completed application.

For more information contact:

County of Simcoe Administration Centre
Social Housing Department
1110 Highway 26
Midhurst, ON  L0L1X0
Phone: 705-725-7215 x.1119