Homeowners may benefit from refinancing their mortgage by lowering monthly payments, accessing equity, or consolidating debt. In spite of this, refinancing is a complex process that requires careful consideration in order to avoid potential pitfalls. Here are some pitfalls to watch out for when refinancing a mortgage in Canada.

Ignoring the Associated Costs

Refinancing often involves various fees and expenses that need to be considered to determine the financial feasibility of the process. Some standard costs associated with refinancing include appraisal fees, legal fees, application fees, and potential prepayment penalties from the existing mortgage. These expenses can quickly add up and impact the overall cost-effectiveness of refinancing.

By ignoring these costs, homeowners may underestimate the true financial impact of the refinancing decision. Homeowners must take the time to calculate the expenses involved in refinancing, considering both the upfront costs and the long-term financial implications.

Not Shopping Around

Different lenders offer varying rates, terms, and conditions, and failing to compare options can leave homeowners paying more than necessary. Homeowners may be unaware of better rates elsewhere by neglecting to explore multiple lenders, including banks and mortgage brokers. Even a slight difference in interest rates can substantially impact the mortgage’s overall cost.

Shopping around allows homeowners to gather quotes from different lenders and compare interest rates, closing costs, and loan terms. This information empowers them to negotiate and secure the most favourable terms for their refinancing needs.

Focusing Solely on Interest Rates

While interest rates are essential when refinancing a mortgage, focusing solely on this can be a potential pitfall. Homeowners should consider the following:

The reputation and reliability of lenders – Working with a reputable lender who offers excellent customer service and a smooth refinancing process is essential to ensure a satisfactory experience.

Their financial goals and plans – If they anticipate selling the property or paying off the mortgage soon, focusing solely on interest rates may not be as crucial. Evaluating the potential savings against the costs associated with refinancing can determine if refinancing aligns with their long-term objectives.

The terms and conditions of the loan – Some loans may have adjustable interest rates or other unfavourable terms that could result in higher costs in the future. Evaluating the entire package, including the interest rate, loan duration, and potential risks, helps homeowners make an informed decision.

Failing to Consider the Long-Term Implications

While refinancing may offer immediate benefits such as lower monthly payments or accessing equity, it is essential to evaluate the long-term impact on the overall cost of the mortgage. Failing to consider the long-term implications can lead to unintended consequences and financial setbacks. Homeowners should consider the following implications:

Paying More Interest – Extending the mortgage term may reduce monthly payments, but it can also result in paying more interest over the life of the loan. Homeowners should carefully assess whether the short-term savings outweigh the potential long-term increase in interest payments.

Altered Financial Plans – If they anticipate selling the property or paying off the mortgage in the near future, refinancing may not be the most cost-effective option. In such cases, the expenses associated with refinancing may outweigh the potential benefits.

Failing to Requalify

Requalifying is the process of reassessing your financial situation and ensuring that you meet the lender’s requirements for refinancing. Neglecting this step can lead to disappointment and wasted time if you cannot secure the desired refinancing terms.

During the requalification process, lenders will review factors such as your credit score, income stability, debt-to-income ratio, and the appraised value of your property. If any of these factors have changed since you obtained your original mortgage, it could impact your eligibility for refinancing.

Homeowners should take the time to thoroughly assess their current financial situation and gather the necessary documentation to demonstrate their ability to meet the lender’s requirements. They should also be aware of any changes in their credit score and work to improve it if necessary. A lower credit score can impact your ability to qualify for favourable refinancing terms or result in higher interest rates. A financial advisor can help assess your eligibility for refinancing and provide guidance on steps you may need to take to improve your chances of requalification.

Refinancing a mortgage in Canada can be a beneficial financial strategy, but it is essential to navigate the process cautiously to avoid potential pitfalls. Ultimately, by being proactive and well-informed, homeowners can successfully navigate the process and reap the rewards of a refinanced mortgage that meets their financial goals and improves their overall financial well-being.

"Refinancing your mortgage is a great way to pay down some debt when unexpected events happens or when you just need to pay down some credit.  Call us to help you through the process!"  Pat Dell - Verico Crown Mortgage 

Source: remax.ca

When you sit down to begin planning a home renovation, it can be easy for the costs to add up. No matter the budget you set, you will always end up going over (make sure you add that 10 to 20 percent cushion!), so the more you can save in various costs, the better off you will be. It is possible to renovate your house reasonably affordably if you are willing to invest a little bit more time and effort. Here are a few tips for renovating your home on a budget without sacrificing quality.

Increase Efficiency, Not Size

It is costly to completely redo a room to gain square footage when often the problem is a lack of storage. If you can reorganize and equip the room for maximum utility, you will not need to blow out the walls. It can be expensive to shell out the money to upgrade things like cabinets and shelves, but you will save a lot more by skipping the addition you thought you needed.

If it is vital to increase the size of a room, see if it is possible to remove a wall instead of creating an addition. It will make your house feel brand new and improve flow without costing too much. Make sure to check if the wall you want to remove is load-bearing since those are much more complicated projects to navigate. If it is a non-load-bearing wall, it will be easy to remove, and the cost will be minimal.

Refinish Instead of Replace

Homeowners often get bogged down in their homes looking drab when the problem is just cosmetic. When a part of your home looks old, it can be tempting to rip it all out and start over, but don’t underestimate the effect that refinishing can have on a space. A very easy way to refresh any space is with paint. You can add an accent wall with a fun colour or paint them all for a fresh look. Don’t stop at walls – furniture and cabinets can also be updated easily with a fresh coat of paint.

Other refinishing projects are equally easy and will go a long way in giving your house a new look. A new backsplash in the kitchen is increasingly easy for homeowners to install themselves and looks very stylish. A runner down the hallway or on stairs can hide large marks and give new life to high-traffic areas. Fresh caulking around a tub can go a long way in making your bathroom look new. Old furniture can be spruced up by refinishing the wood or reupholstering the material. The possibilities are endless.

Reuse and Recycle

Just because you are tired of your furniture in one location does not mean it can’t be given new life elsewhere. Some of those old kitchen cabinets can be set up to create a downstairs kitchenette. Knobs and light switches can be easily changed to another location. Even simply rearranging furniture can completely change the look and feel of a room without costing a dime.

If you are willing to put in a little time, you can reap big savings with recycled or lightly used fixtures and other materials. Search online or thrift stores for items at a fraction of home center prices. The caveat if you choose to recycle: many contractors will not work with salvaged items, or homeowner-supplied items in general, because they don’t want to assume the liability if something goes wrong. However, if you are doing most or all of the work yourself, you can find plenty of materials simply by looking around a little bit.

DIY When Possible

Unless you have a strict timeline for your renovation, it is always worth doing at least some of the work yourself. There are plenty of jobs that can be done by the average homeowner, such as demolition, painting, sanding, or insulating. Instead of paying someone to do tasks you can easily do yourself, save money and contribute to your renovation.

Before all else, make sure you have a plan for your renovation. If you are not specific about what you want both with yourself and any contractors, you will end up costing yourself more money by potentially performing renovations that you don’t end up loving.

Source: RE/MAX Canada https://blog.remax.ca/how-to-renovate-a-house-on-the-cheap/?rmxv=1687378628&fbclid=IwAR36N2VinjK4V94edIfxc9SgZ3w6N3U-4Rwte7dm74OdErsTTQ4QPU_HaNI

Embarking on the journey of buying a home is an exhilarating experience. Yet, for those seeking to make the most significant purchase of their lives, it can also feel overwhelming. Buying a home as a single person can be intimidating, but we have some smart tips for single home buyers that will make the process much smoother.

With challenging conditions in the Canadian housing market this year, becoming a homeowner as a solo act can carry more stress from a financial perspective than if you were going in with another person. However, each scenario has distinct advantages. For example, as a single you don’t have to consider another person’s needs and wants when it comes to finding your dream home. This means less compromising. If you work remotely or your job is flexible, as a single person, you can open your search field by looking into different cities or towns, and potentially even different provinces.

If you’re looking at entering the housing market as a solo endeavour, we’re breaking down our top tips for single home buyers, to help you make the most of your purchasing experience.

 Be Aware of Your Financial History

It’s hard enough to qualify for a mortgage on one income. As always, financial history plays a significant role in getting a mortgage from a lender. Before looking at homes for sale, it’s essential to get a stronghold on your credit score, as the higher your score, the more favourable your interest rate. If your score is a little lower than you’d like, you can take steps to improve your score before seeking pre-approval for a mortgage.

When considering your financial history, you may also want to look at your potential financial future. While your mortgage will be based on a few criteria like your credit score and income, remember that living alone in a home with an extra bedroom or basement apartment creates an opportunity for rental income, which can help ease the burden of paying off a mortgage in a single-income household.

Consider Both Your Present and Future Self

As a single person wanting to purchase a home, if you’re focusing on your immediate circumstances and needs, you might consider looking at smaller homes with just one bedroom and enough living space for yourself. However, purchasing a home is a long-term investment, so it’s important to consider your future needs as well. While you may not require a ton of space right now, five or 10 years down the road, you may have a partner or children sharing your home with you, meaning you’ll be needing more space. To get the most out of your home, think about the bigger and longer-range picture before putting in an offer, but prioritize what’s realistic and within your budget.

It’s also important to consider your immediate wants and needs in a home. If you want a house with a hot tub, get the house with a hot tub, providing it’s affordable for you. After all, this is your space, and you should be able to enjoy it fully.

Be As Flexible as Possible 

Above we briefly touched on how flexibility is usually at an all-time high when you’re buying a home as a solo act. Since it is just you, there is more freedom regarding location; therefore, it’s essential to keep your options open. Sure, there may be a specific neighbourhood you’ve been eyeing, but unless you must stay in the same town, solo buyers might be wise to broaden their search and look at other markets. Perhaps your dream home is in another city – you’ll never know unless you give it a shot.

Trust Yourself

Purchasing a home is a significant investment, perhaps one of the largest investments you’ll make in your lifetime. It’s easy to start second-guessing yourself when it’s time to make big decisions. However, the beauty of buying a home for yourself is that the opinions of others don’t matter. When you’re getting ready to make an offer on that house you have your eye on, seek advice rather than approval.

Before making an offer on a home or even starting your house-hunting search, connect with a professional real estate agent and a financial advisor. This way, you can get a good grasp on what you can afford based on your financial history and current income and stay in the know and have first dibs on any homes that come on the market that fit your buying parameters.

Source: remax.ca

Renters across Canada have been struggling with  rising rent costs  and wondering how they will be able to save for a down payment while renting. However, with some money management tricks and modification to your daily living, you can save for a down payment. It might go slowly, but every little bit helps. Here are some tips to save for a down payment while renting.

1. Make a Budget and Stick to It

Making a budget is the easiest way to make your financial goals happen. When you have a plan for where your money is going, it puts the power back in your hands and gives you an idea of how long it will take to save for a down payment.

To make a budget, write down your monthly income. Then, list your monthly expenses, including your savings goal. Your expenses should always be less than your income; otherwise, you are going into debt. Track your spending to ensure your budget is accurate. But the trick is that if you want to save enough for your down payment, you must ensure you stay within budget as much as possible.

2. Get Rid of Your Existing Debt

Qualifying for a mortgage does not end with saving enough for a down payment. Mortgage lenders will also look at your debt-to-income ratio (DTI), the percentage of gross income used to pay minimum monthly debt payments. If you have a high DTI, you are a risk to the lender, who will be less likely to approve you for a mortgage. However, if you work to cut down your existing debt while saving for your down payment, you can get approved for the house you want.

3. Cut Unnecessary Spending

Another way to boost your down payment savings is to cut back on a few luxuries. For example, consider buying groceries and making meals instead of ordering in, working out at home for free instead of paying for a gym membership, or taking public transit. Then, take the money you would have used on those splurges and put it into your savings account for the down payment.

Some people might be willing to sacrifice just about everything to have their house sooner, but most of us would rather not sacrifice our quality of life. Make a line in your budget for fun things like a night out with friends, and ensure you don’t go over budget. Saving for a down payment is not worth sacrificing your mental health.

4. Lower or Eliminate Rent Costs

Your most considerable monthly expense is likely your rent, so an effective way to save for a down payment is to cut your rent costs. Although moving is not fun, it can save you thousands of dollars annually. Renters who work from home can choose a location with a lower cost of living, while those who work in an office can find a cheaper apartment closer to their work, saving them expenses for both housing and transportation. Then, take the difference in your expenses and put it in your savings account for your down payment.

5. Add Extra Income

While cutting expenses is an effective way to create room in your budget to save for a down payment, another way to save is to take on a side hustle. There are many opportunities for part-time work, such as driving for Uber or Skip the Dishes or becoming a tutor. You could also start your own home business cleaning houses, pet sitting and dog walking, or doing yard work. It doesn’t have to be fancy if it earns you extra money for your down payment.

6. Immediately Save Any Bonuses or Gifts

If you receive regular bonuses at work or a tax return each year, these can easily be contributed toward your down payment savings without sacrificing your quality of life. To take it up another notch, ask for down payment contributions in place of gifts for your birthday or Christmas. If you feel you are missing out on fun for yourself, set aside a predetermined percentage or amount to use as you want, and put the rest in savings.

With these tricks, you can save up for a down payment while renting. Set up a savings account dedicated solely to your down payment and watch as your efforts pay off – literally!

Source: remax.ca

If you are a handyperson, or simply love old houses, then the idea of buying a fixer-upper home could be very alluring. Fixer-uppers often go for way below market price because of their condition, and you can invest time and money into renovating it exactly as you want. However, buying a fixer-upper is not for the faint of heart. Read our guide to buying a fixer-upper to learn more.

Your Life is Going to Be Disrupted During Renovations

No matter how large or small the renovations are, there is going to be some inconvenience while they are happening. You should also expect the project to take longer than anticipated since supply chain issues and other factors could hinder your renovation’s progress. Consider your lifestyle while you renovate: Are you ready to live in the home while it’s being remodelled? Can you live without things like a bathroom or a fully functioning kitchen while they are being updated? Living in a house under construction could be a dealbreaker if you work from home or have young children.

Know What Projects to Prioritize

The ideal fixer-uppers are those which mostly require cosmetic improvements like paint touchups, drywall repairs, or floor refinishing. However, most fixer-uppers are going to have some large projects like redoing a kitchen or bathroom, creating an extra bedroom, or even adding a complete addition to the home. Knowing what projects need to be done before moving in, as opposed to what can be done while you live there, will make a difference in your quality of life. It is also possible to fold cosmetic improvements into a structural repair, such as installing a skylight while redoing the roof, to kill two birds with one stone.

It’s Very Possible to DIY…

Many parts of renovating a fixer-upper are possible to do on your own. With a bit of research and a lot of hard work, you can learn to do tasks like laying tile or carpet, hanging cabinets, building a deck, replacing windows, and more. If you are not the hands-on type, be prepared to devote considerable time and money to contractors, which could completely wipe out your budget and cause delays.

But Know When to Hire a Pro

While many tasks in renovating a fixer-upper can be done on your own, a professional should always do certain jobs. At the very least, plumbing and electricity should be left to the pros, as messing up those parts can ruin your fixer-upper and cost you a lot of time and money; (and be dangerous!). Be realistic about what you can and cannot do, and don’t be afraid to hire help when necessary.

You’re Going to Go Over Budget

When you create the budget for your fixer-upper, factor in a 10 to 20 percent buffer, and beware of relying on premade budgets since they may not accurately reflect market prices. If you are changing anything structural, ensure that your budget includes a section for permits since those can be expensive.

Delays are Inevitable

Never have an end date when your fixer-upper must be completed. The reality is that you will go over your allotted time, and it helps to have no pressure. Remember to include time for any licenses and permits you may need in your plan because these can sometimes take longer than expected.

Invest in Comfort

You want to fix your house up right the first time, so take the time to plan around beautiful focal points and invest in quality pieces that you want to look at each day. Avoid cutting corners on second-rate materials. Although it may initially help your budget, it could be more costly in the long run if hardware breaks or tools are insufficient for the task. And always order more material than you think you need since it can be challenging to get another gallon of paint exactly the same colour or find a piece of stone or wood that matches the original.

The beauty and challenge of fixer-uppers is that each one is different, and your renovations will depend on your budget, timeline, and lifestyle preferences. With this guide, you can be realistic about whether you are willing to take on a complete fixer-upper

Source: remax.ca

When you purchase a home, a down payment is typically applied to the purchase price, and the balance is to be paid off over your term of the mortgage. The loan you receive from a lender in order to pay for the house is called a mortgage.

Simply put, a mortgage is a legal and binding agreement between a lender and a borrower for a specific amount of money that must be paid back within a predefined amount of time. The mortgage is a secured loan in that the house you are buying is collateral for the loan. This means that, should you not meet your mortgage repayment obligations, the lender has the right to take the property.

Purchasing a home and taking on a mortgage is a big commitment. In addition to the amount borrowed, the interest rate you receive is also a factor in assessing affordability. Shopping for a better interest rate could save you tens of thousands of dollars over time.

10 tips to help you get the best mortgage rate in Canada

1. Research Mortgage Interest Rates

There is no one-size-fits-all approach to getting a mortgage. There are a few different types of mortgages, each of which will impact the interest rate you receive, based on a few of the factors we will be touching on later.

The first, and also the best option, is a prime mortgage. These are offered to borrowers who are considered less risky by lenders. These borrowers typically have a credit score of at least 670, have contributed a down payment of between 10 and 20 per cent, and have a low debt-to-income ratio. The most significant perk of a prime mortgage is a lower interest rate, which will help the borrower save thousands of dollars over the loan’s lifetime.

The other is a subprime mortgage. These are offered to borrowers with a lower credit score, typically between 580 and 669. Subprime mortgages carry higher interest rates because borrowers are seen as “riskier.”

By knowing your credit score before speaking with a professional, you can be sure to get the appropriate interest rate.

2. Decrease Your Debt-to-Income Ratio

A simple way to get the best mortgage rate in Canada is to decrease your debt-service ratio. This represents the percentage of your gross monthly income used to pay off your debts. Lenders use this value to assess the risk you carry when borrowing money. Canada Mortgage and Housing Corporation recommends keeping your Gross Debt Service (GDS) ratio (your monthly household income that covers your housing costs) below 39 per cent, and your Total Debt Service (TDS) ratio below 44 per cent.

To decrease this ratio, make larger payments on your debts, reduce debt by purchasing only what you can afford in cash, or increase your income. By decreasing your debt-to-income ratio, you signal to lenders that you are less of a risk.

3. Improve Your Credit Score

Improving your credit score takes time, but it can be done. Some easy ways to accomplish this are to make larger payments on your outstanding credit card bills, pay off any collections that may be on your credit report, get caught up on all your bills, and keep outstanding balances on credit cards low.

4. Increase Your Income Stability

Income stability signals to a lender that you’re less likely to default on your mortgage. First, sit down and run an honest assessment on how much money you bring in every month versus how much you spend, to improve your income stability. Then, look for ways to spend less and earn more. This can be accomplished by cutting out frivolous expenses, asking for more hours at work or taking on a side hustle.

5. Gather Your Employment History

Before meeting with a mortgage lender, gathering your employment history is key. Mortgages are large loans, and lenders want to know that you are serious about paying them back and are a low risk for default on your payments. Compiling your employment history shows the lender that you have a track record of gainful employment and are unlikely to be unemployed in the foreseeable future.

6. Save More and Increase Your Down Payment

By contributing a larger down payment, you can reduce the size of your mortgage and attract a more favourable interest rate. Typically, if your down payment is greater than 20 per cent, you will receive a better interest rate than if you put down only five per cent.

7. Use Cash Reserves

Lenders will look at your savings account to ensure you have enough cash in reserve to cover your mortgage in case of job loss. They like to see a few months worth of mortgage payments tucked away in your bank account. This also shows lenders that you are suitable and fiscally responsible. Consider saving up three or four months worth of mortgage payments to get a more favourable mortgage rate.

8. Consider Interest Rates

Currently, interest rates are exceptionally low. Consider timing the purchase of your home during a time when interests rates are lower, to reduce your monthly payments and the interest paid over the lifetime of your loan.

9. Low- Versus High-Ratio Mortgages

If you have less than 20 per cent as a down payment on the home you plan to purchase, you’ll need mortgage loan insurance. This serves as an added layer of security for lenders, should you default on your loan. This fee can be paid up-front or added to your monthly payments. To avoid this expense, save up at least 20 per cent for your down payment.

10. Shop Around

Finally, once you have completed all the steps above to get the best mortgage rate, it is essential to shop around. Some lenders can give you a better borrowing rate than others, and it is vital to know all the options available to you before you commit to one of the most significant investments you’ll make in your lifetime. While you’re at it, research lenders, too, as they may offer different mortgage terms that can affect your bottom line. Finally, consider working with a mortgage broker. This is a third-party intermediary between the lender and the borrower. A mortgage broker will collect your financial information and “shop around” for you, to find the best mortgage rate and terms from their pool of lenders. And the best part? A mortgage broker’s services don’t cost the borrower a thing.

Sources:

Canada.ca

• https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/improve-credit-score.html

• https://www.canada.ca/en/financial-consumer-agency/services/mortgages/interest-on-mortgages.html

Forbes

• https://www.forbes.com/sites/robertberger/2015/05/07/6-tricks-to-getting-a-great-mortgage-rate/?sh=3aab6ed93f0f

remax.ca 

      https://blog.remax.ca/10-tips-for-getting-the-best-mortgage-rate-in-canada/