If you’ve ever been around a Gen-Xer and Millennial together, you’ve probably heard this debate before: Who had it easier trying to get into the housing market?

Undoubtedly, the millennial will claim there is no struggle greater than the one they currently face, while the Gen-Xer will tell their younger cohort that they are spoiled and don’t understand how hard it was to adult in the 90s.

So, are millennials better or worse off than Gen-Xers at the same age?

A report earlier this year from Stats Canada set out to settle the debate with some interesting findings.

For starters, the study found on average young millennials earned more than young Gen-Xers. Specifically, Gen-Xers between the age of 25 and 34 in 1999 earned on average $51,000 annually compared to millennials who earned $66,500 in 2016.

The study found that millennials in 2016 also had higher assets and net worth then their grunge-era counterparts in 1999 at $154,000 to just $76,700 respectively.

However, millennials were found to be more indebted, with a debt-to-after-tax-ratio at 216 per cent compared to 125 per cent for Gen-Xers.

The study also found millennials are taking on larger mortgages then previous generations. The median mortgage debt on the principal

residences of a millennial between the ages of 30 and 34 in 2016 was $218,000 compared to $117,500 for Gen-Xers in 1999.

Interestingly, though their median net worth is higher, there are greater differences in economic well-being among millennials, specifically, millennials in the top 10 per cent held 55 per cent of all total net worth accumulated by their generation.

The study also found that millennials are entering the housing market at similar rates as previous young generations.

So, who can claim the biggest hardship to getting into market? That would depend on how you want to spin the facts. Instead, maybe the key is in the finding that millennials are getting into the market at the same level as their parents and grandparents did before them.

Of course, there have been a number of market factors and challenges each generation has had to face. Consider late boomers trying to get into the housing market with interest rates at nearly 20 per cent in the early 80s, or the recession and economic malaise of the 1990s.

At the end of the day, and this study proves it, young people in every generation have found a way to look past the challenges in their face, and fulfill the dream of homeownership. And if you’re a young person ready to buy or soon to be, a mortgage broker is your best bet to help get you there.

It’s the first and only thing anyone usually asks when you talk about your mortgage: What’s your rate? While everyone can recall their rate off the top of their head, it’s the only detail of the mortgage they remember or care to know. Though the rate is obviously important, your mortgage is so much more than a rate, and if you’re not paying close attention, it can cost you money.

Before we dive deeper, let’s talk fixed rate vs. a variable rate and which one is better. Well, that all depends. First-time homebuyers and older homebuyers typically love the stability of a fixed rate. Keep in mind, seven-in-ten fixed mortgages are broken before the term ends. A fixed rate for five years is fine as long as you stick with a lender that’s going to calculate the penalty if you break your mortgage on the contract rate versus the Benchmark rate. That’s because the Benchmark rate, or as it’s sometimes called the Bank of Canada rate, is higher than your contract rate. Typically a credit union or monoline is the right choice for this mortgage.

Variable rates are great with any lender as it just comes down to who offers the best discounted variable rate. There’s a pretty simple way to decide whether a variable or fixed makes sense, based on rate alone. It’s called the 50-basis point rule.

Basically, take the best fixed rate out there and the best variable rate out there and subtract the two. If the number is less than 50 basis points, there is strong argument to go for a fixed rate. However, if the difference is more than 50 basis points, there’s a solid case to go with a variable.

Pretty simple right? What’s not as simple is the personality of your mortgage. It may not seem like it, but yes, your mortgage has a personality. Think of it like a shiny sports car. It may look amazing when it rolls off the lot, but as the years go on, does it meet your daily needs? Besides your mortgage rate, you need to consider portability, and whether it can be blended and extended and how penalties for breaking the mortgage are calculated. When people start looking for a mortgage, they’re usually getting advice from friends or their parents, and the only question they’re asking is, what’s the rate? But if they don’t know the details of the mortgage like the ones listed above, you can tell them to stick their head in the sand, because they’re giving you bad advice. And if a mortgage broker is only fixated on the rate, you’re working with the wrong one.

Life happens and our circumstances change. You really want to make sure the mortgage will work for you in the future before you sign on the dotted line.

Dust or vacuum radiators, baseboard heaters and furnace duct openings often and keep them free from obstructions such as furniture, carpets and drapes.

Replace/Clean Furnace Filters:
Check and clean or replace furnace air filters each month during the heating season. Ventilation system filters, such as those for heat recovery ventilators, should be checked every two months.

We all know owning a second rental property is a great way to invest and build your wealth portfolio. Unfortunately, a lot of homeowners sitting on plenty of equity are afraid to use that money for a downpayment to purchase a rental or investment property. The idea of a second or third mortgage tends to spook people away. While there are always financial risks in any investment, there’s a little-known incentive that might make you take the leap from homeowner to real estate mogul.

You can expense the interest on a mortgage as long as the INTENT for the funds are used on an investment property.

Thus, when you’re refinancing or taking equity, you can pull money from your existing owner-occupied home and use the funds on a rental property. Now the interest on the money you pulled out (and only that money, not any existing money) can be written off or expensed against your rental income.

You could expense your rental income down to a negative which in turn lowers your overall taxable income. Putting even more money back into your pocket.

It might only lead to a savings of a few hundred dollars a month, but not many people know it’s an option and is an extra incentive to consider.

You’ll definitely want to talk to your accountant and your mortgage broker to get more details.

There are also a few things to consider if you’re going down this route for an investment property.

You must claim your rental income on your tax return. It’s tax evasion if you don’t.

Mortgage rates are also typically cheaper for owner-occupied homes compared to rental or investment homes. Don’t be tempted to tell your broker or lender the house use will be owner occupied when it will actually be a rental because you want the lower rate. That is mortgage fraud. You could get charged and or the lender could call the balance.

While taking on a second or third mortgage might seem a little daunting, there are some options available to save you money and your mortgage broker can help.

More and more Canadians do not have a defined benefits pension plan. Companies are moving away from this model due to the expense of maintaining enough in the fund to pay out until the employee and survivors die. Those who are self employed also do not have pensions beside the Canadian Pension Plan.
What can you do if you fall into this category? How do you save enough to have a comfortable retirement? The answer is, build up your own investments through a real estate portfolio.

In order to purchase a revenue property you need 20% down payment . This can be a huge sum to save and you could get discouraged as you see property prices rising. There is a legal work around that is an open secret that realtors and other property investors have used for years.

Purchase a starter home with a 5% down payment. While you are living in the property, it is considered as your primary residence and any increase in value is tax free. Start from Day 1 to save for your next home. You may purchase a condo as the prices are usually less than most detached homes in Canadian cities. When you have saved 5% or if your present home has increased enough in value that you have more than 20% in equity you can remove that extra equity with a line of credit or by refinancing your home you can now purchase a larger home. Now you move to House #2 and rent out House #1.

You are now on your way to building a real estate portfolio. If you repeat this every 3 to 5 years in 20 years you’ll have a portfolio of 4 or more rental properties Is this for everyone? No, if you aren’t handy and if you don’t want the expense of hiring a property management company you cold end up spending your free time on maintenance of several homes.

Talk to your financial advisor or accountant first and then meet with your local Dominion Lending Centre mortgage professional. We can provide answers to your real estate financial needs.

By David Cooke

With all the news we have seen on the election, I thought I would sum it up from a mortgage industry perspective.

What the liberal win means for your mortgage:

1. We will see the continuation of the First Time Home Buyers’ Incentive. Check out the link for more information at https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive

2. Property Transfer Tax modifications were on the platform, so we will await the date that change is applicable.

3. Consumers will still be able to withdraw up to $35,000 from their RRSPs as part of the government’s Home Buyers’ plan.

4. Bank of Canada Rates may not decrease as expected this year – unless there is a significant downtown in the market suddenly- based on the snapshot of recent activity that doesn’t appear as likely. It certainly makes it easier for the lenders not to pass the decrease down the line to the consumer.

5. We will likely see a national housing tax implemented in addition to the provincial ones already in place.

For items 1, 2 & 5, here is a link. https://globalnews.ca/news/5893892/trudeau-liberals-first-time-homebuyers-program-expansion-campaign-promise/

It doesn’t appear we will see any of the changes to the stress test or amortization hoped for by many.

Stay tuned for more updates and what the BOC decides to do Oct. 30 and Dec. 4.

While the constant in our market will always be change, Dominion Lending Centres mortgage professionals are here at the frontlines to help you navigate the market to your advantage and save you money. Please reach out to us with any mortgage questions on how we can help you or those you care most about.

Co-signing on a loan may seem like an easy way to help a loved one (child, family member, friend, etc. ) live out their dream of owning a home. In today’s market conditions, a co-signor can offer a solution to overcome the high market prices and stress testing measure. For example, if you have a damaged credit score, not enough income, or another reason that a lender will not approve the mortgage loan, a co-signor addition on the loan can satisfy the lenders needs and lessen the risk associated with the loan. However, as a co-signor there are considerations.

1. If you act as a co-signor or guarantor, you are entrusting your entire credit history to the borrowers. What this mean is that late payments on the loan will not only hurt them, but it will also impact you.

2. Understand your current situations—taxes, legal, and estate. Co-signing is a large obligation that could harm you financially if the primary borrowers cannot pay.

3. Try to understand, upfront, how many years the co-borrower agreement will be in place and know if you can make changes to things mid-term if the borrower becomes able to assume the original mortgage on their own.

4. Consider the implications this will have regarding your personal income taxes. You may have an obligation to pay capital gains taxes and we would highly recommend talking to an accountant prior to signing off.

5. Co-signors should seek independent legal advice to ensure they fully understand their rights, obligations and the implications. A lawyer can lay it out clearly for you as well as help to point out any things you should take note of.

6. Carefully think about the character and stability of the people that you are being asked to co-sign for. Do you trust them? Are you aware of their financial situation to some degree? Are you willing to put yourself at risk potentially to take on this responsibility? Another consideration is to think about your finances down the road and determine how much flexibility will be needed for yourself and your family too! If you have plans of your own that will require a loan, refinancing your home, etc. being a co-signor can have an impact.

Co-signing for a loan is a large responsibility but when it is set-up correctly and all options are considered, it can be an excellent way to help a family member, child, or friend reach their dream of homeownership. If you are considering being a co-signor or wondering if you will require a co-signor on your mortgage, reach out to a Dominion Lending Centres mortgage professional. We are always happy to answer any questions and guide you through processes like this.

If you’re in a mortgage that’s coming up for renewal in the coming months and you’re considering just staying with your current lender, you wouldn’t be alone.

According to the Canadian Mortgage and Housing Corporation’s (CMHC) Residential Mortgage Industry Report released in the summer, in 2018, the number of mortgage renewals with the same lender increased by 16 per cent over the previous year

The report suggested one of the factors that may have contributed to large increases in loan renewals with the same institution are the tighter approval criteria. In other words, people are worried they may not qualify for a new mortgage if they switch lenders, so they’re staying put.

You’ll remember in the fall of 2017, OSFI, (the Office of Superintendent of Financial Institutions) the agency that regulates the financial industry, announced tighter rules on mortgages. The biggest change related to uninsured mortgages, or homebuyers with 20 per cent or more for a down payment. These people are now required to go through a “stress test” or qualify using a minimum qualifying rate.

The changes came a year after a similar stress test was introduced for insured mortgages.

If the tighter mortgage rules still have you stressed as you face a mortgage renewal, the CMHC report noted the approval rate for same lender renewals remained stable at 99 per cent. Renewals are not specifically subject to the new stress test and are more likely to meet current lender criteria, the reported noted.

So, does that mean you should just automatically renew your mortgage with the same lender when

your term is up? Not necessarily. You need to reach out to a mortgage professional to get the best advice.

For starters, most lenders, especially the big banks, will send you a renewal letter when there’s about three months left on the term. Sometimes that letter could come with six months left. Typically, the lender will offer you a rate at that time and all you’ll have to do is sign at the bottom line to roll over your mortgage.

But beware, lenders often offer a higher rate than a new client because they’re hoping the ease of renewal will keep you from seeking out a new lender and lower rate.

In some cases, it may be best to just sign and roll over your mortgage. There are a few things to consider. If you decide to change lenders, you’ll basically have to go through an approval process again. That entails getting all your documents, lawyer’s fees and appraisals.

You’ll have to ask yourself, is it worth the effort to save a few basis points off your rate, or a few hundred dollars over a term to make the switch?

For some it won’t be. But, if a switch can lead to saving thousands of dollars, it would certainly be something to consider. While everyone’s situation is different, the larger the mortgage, the bigger the savings will be if you can find a lower rate.

Often, homeowners will just use a bank their parents recommend for their first mortgage. But they might find themselves not happy with the service or terms of the mortgage and may just want to switch to a different lender as the mortgage comes up for renewal.

If that’s a situation you find yourself in, you have options, and a mortgage broker can help you make the best decision.

Buying a home is more difficult now than ever—and this is not news to anyone! No matter where you live, the recent stress testing measures, increase in housing prices in major cities, and continued increase of the cost of living all combine to make home ownership a daunting task. But we do want to offer some help and solutions for young families looking to get into the market as we truly to believe it’s not impossible and have helped many families do just that!

1. Take a step outside of the downtown core. Typically, property right in the heart of the city is more expensive due to the location and the continued demand. Stepping out to one of the outlying suburban areas can offer more affordable options and can also lend you with an increased inventory of properties within your price point.
2. Consider finding a rent to own property. A Rent to Own (RTO) property can allow you to rent a property while subsequently saving up for a down payment.
3. Talk to a mortgage broker. Speaking with a broker and going through a pre-qualification process can help you by allowing you to see the areas in which you will need to improve to help make you more attractive to lenders. This can include things such as:
a. Increasing your credit score
b. Decreasing your overall debt or consolidating your current debt.
c. Looking at increasing your overall income options and the ways in which you can do that.
4. Consider using a co-signor(s) for your mortgage to start with. One solution we have found that works well for certain clients is having a co-signor(s) on the mortgage with a planned exit strategy to remove them once the client’s personal income increases or they are able to qualify for the mortgage on your own (ex. By paying down debts and/or improving their credit score). This solution is situation specific, so speak to your broker for more details.
5. Save, Save, and Save some more. We know this is common sense but speaking with a financial advisor can help show you ways in which you can save and make your money work for you. We can happily recommend a few as can your mortgage broker.

We know that the state of real estate can seem overwhelming and depressing at times. Keep in mind though that not all hope is lost, and you do have options available to you! Remember the “dream” of the white picket fence detached home is not for everyone…now more than ever multi-family properties such as townhouses and condos are offering more and more amenities and beautiful properties for less. The bottom line is considering all your options and work with a dedicated broker who can help you reach your goals—whatever they might be!

By Geoff Lee

Buying a home might just be the biggest purchase of your life—it’s important to do your homework before jumping in! We have outlined the 5 mistakes first time homebuyers commonly make, and how you can avoid them and look like a Home Buying Champ.

1. Shopping Outside Your Budget
It’s always an excellent idea to get pre-approved prior to starting your house hunting. This can give you a clear idea of exactly what your finances are and what you can comfortably afford. Your Mortgage Broker will give you the maximum amount that you can spend on a house but that does not mean that you should spend that full amount. There are additional costs that you need to consider (Property Transfer Tax, Strata Fees, Legal Fees, Moving Costs) and leave room for in your budget. Stretching yourself too thin can lead to you being “House Rich and Cash Poor” something you will want to avoid. Instead, buying a home within your home-buying limit will allow you to be ready for any potential curveballs and to keep your savings on track.

2. Forgetting to Budget for Closing Costs
Most first-time buyers know about the down payment but fail to realize that there are a number of costs associated with closing on a home. These can be substantial and should not be overlooked. They include:
• Legal and Notary Fees
• Property Transfer Tax (though, as a First Time Home Buyer, you might be exempt from this cost).
• Home Inspection fees
There can also be other costs included depending on the type of mortgage and lender you work with (ex. Insurance premiums, broker/lender fees). Check with your broker and get an estimate of what the cost will be once you have your pre-approval completed.

3. Buying a Home on Looks Alone
It can be easy to fall in love with a home the minute you walk into it. Updated kitchen + bathrooms, beautifully redone flooring, new appliances…what’s not to like? But before putting in an offer on the home, be sure to look past the cosmetic upgrades. Ask questions such as:
• When was the roof last done?
• How old is the furnace?
• How old is the water heater?
• How old is the house itself? And what upgrades have been done to electrical, plumbing, etc.
• When were the windows last updated?

All of these things are necessary pieces to a home and are quite expensive to finance, especially as a first- time buyer. Look for a home that has solid, good bones. Cosmetic upgrades can be made later and are far less of a headache than these bigger upgrades.

4. Skipping the Home Inspection
In a red-hot housing market, a new trend is for homebuyers to skip the home inspection. This is one thing we recommend you do not skip! A home inspection can turn up so many unforeseen problems such as water damage, foundation cracks and other potential problems that would be expensive to have to repair down the road. The inspection report will provide you a handy checklist of all the things you should do to make sure your home is in great shape.

5. Not Using a Broker
We compare prices for everything: Cars, TV’s, Clothing…even groceries. So, it makes sense to shop around for your mortgage too! If you are relying solely on your bank to provide you with the best rate, you may be missing out on great opportunities that a mortgage broker can offer you. They can work with you to and multiple lenders to find the sharpest rate and the best product for your lifestyle.

Remember, when you are buying a home, you are not alone! The minute you decide to work with a Dominion Lending Centres Mortgage Broker you are bringing on a team of individuals who are there to help you through the process from start to finish.

By Geoff Lee