14 Mar

Void Cheque

General

Posted by: Adam Hawryluk

What is a Void Cheque?

A void cheque shows where your funds for your mortgage payments will be withdrawn from.

Why do lenders require a Void Cheque? 

Lenders need to have the ability to withdraw the funds from your account for the purpose of your mortgage payments.

How can I get my Void Cheque? 

If you do not have a cheque book for the account you are planning to have the funds withdrawn from, your bank can provide you with a document that may be used instead. 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Signed Commitment

General

Posted by: Adam Hawryluk

Your signed commitment is one of the last things that will need to be completed during your mortgage process.  I will receive the commitment from the lender, package the documents together, and we will meet to sign the documents and go over any final questions you may have.  If you are unable to meet face to face to get these documents finalized, a signed and scanned document is also acceptable. 

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Credit Report

General

Posted by: Adam Hawryluk

What is a Credit Report?

 Your credit report itself is simply a listing of all of your mortgage and consumer debt. Here in Canada, the two main credit reporting agencies are Trans Union and Equifax.  Both agencies have a credit history file on anyone who has ever borrowed money.  Every time you borrow money, or make a payment on a loan or credit card, the lender then reports the information about the transaction to these two agencies. In addition to credit information, you will also find liens and judgments on your credit report as well as your address and possibly your work history.

One thing that many people do not know is that you have the legal right to obtain a copy of your credit report.  A mortgage professional can help you obtain a copy of this report and go through it with you to verify that all of the information is true and correct.

Why do lenders need to know my Credit?

The accumulation of all of this information is called your credit report.The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character.  Whether we like it or not, our financial habits have a lot to say about the way in which we choose to live our lives.

The credit score, or beacon score, is a number which gives mortgage lenders an idea of your lending risk.
Credit scores range from 300 to 900, the higher your credit score the better. The mortgage products and interest rate that you will qualify for are often determined by your credit score.

How can I improve my Credit?

The good news is that your credit report is a working document.  This means that you have the ability over time, to repair any damaged credit and increase your credit score.

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Form B

General

Posted by: Adam Hawryluk

What is a Form B? 

Form B is the strata corporation’s information certificate.  The required contents of this form are set out in the Regulations of the Strata Property Act.  Required information includes:

1.The monthly strata fees  

2. Any arrears of strata fees  

3. Any alteration agreements affecting the strata lot

4. Any upcoming special levies

5. Bylaw amendments that have not yet have been registered

6.¾ vote resolutions for which notice has been given but not yet voted upon

7. A copy of the strata corporation’s depreciation report, if any

8. The number of strata lots that are rented  

9. A number of other items.  

If you are a council member, you should never sign a Form B.  These should always be done by the property manager.

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Proof of Condo Insurance

General

Posted by: Adam Hawryluk

What is Proof of Condo Insurance?

It is a statement provided by your insurance company outlining your coverage and monthly premiums.

Why do lenders require Proof of Condo Insurance? 

Lenders require these documents to prove adequate insurance and to confirm the monthly costs you have.

How can I obtain my Proof of Condo Insurance? 

This document should be in your insurance documents. Otherwise, it can be obtained by your insurance provider/insurance broker.

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc. nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Current Property Tax Bill

General

Posted by: Adam Hawryluk

What is a Current Property Tax Bill?

A statement from your local city or municipality outlining your current year’s tax bill.

Why do lenders need a Current Property Tax Bill? 

Required to confirm the annual tax costs on your property and to ensure there are no property taxes in arrears. 

How can I obtain my Current Property Tax Bill?

Property taxes are sent out annually. If you are unable to locate it, you may contact your local municipal tax authority to receive a duplicate.

For a line by line explanation of your property tax notice, click HERE.

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Property Transfer Tax

General

Posted by: Adam Hawryluk

 

The Property Transfer Tax is a tax payable to the Provincial Government by purchasers of real estate.  The tax applies to all types of real estate, whether residential, commercial or industrial. However, there are exemptions available for first time home buyers and new constructions. To confirm if you are exempt, please refer to Property Transfer Tax Exemptions and discuss this option with your lawyer.

The amount of the Property Transfer Tax is 1% on the first $200,000.00 of the property’s fair market value and 2% on the remaining fair market value. 

“Fair Market Value” is best described as the price that would be paid for a property on the open market (which is usually the actual purchase price paid for the property).  If the transfer of property is taking place without the exchange of money, the fair market value must be the fair value of the property if same was sold on the open market.  In some situations, the fair market value is determined by the recent Assessment received from the Assessment Office. 

You are charged property transfer tax when you make changes to a property’s title, including:

  • -acquiring a registered interest in the property
  • gaining an additional registered interest in the property
  • -becoming the registered holder of a lease, life estate, or right to purchase for the property
For full details regarding tax amounts and exemptions, please visit Understanding Taxes.

Property Transfer Tax should not be confused with Property Tax.  The Property Transfer Tax is a one-time tax paid to the Provincial Government by purchasers of real estate.  The Property Tax is the tax paid on an annual basis to the local City/Municipality. 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc. nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Closing Costs

General

Posted by: Adam Hawryluk

What are Closing Costs? 

Closing costs are the fees associated with the purchase of your home that is in addition to the actual purchase price, such as legal fees and disbursements, land transfer taxes and moving expenses. Please note that for CMHC (Canada Mortgage and Housing Corporation) and Genworth Financial Canada insured mortgages, you must provide evidence of available cash for closing costs equal to 1.5% of the purchase price. This is a standard calculation and the lawyer or notary you use will determine final/exact closing costs.

How are Closing Costs Calculated? 

This tax is payable on the purchase of all real property in B.C. The calculation is based on 1% of the purchase price up to $200,000 and 2% of any amount above $200,000.  Most first time buyers are exempt from this if they meet certain criteria and always confirm with the lawyer you are using for the purchase. The main criteria are:

  • Borrower has never owned a principal residence anywhere in the world;
  • Maximum purchase price of $475,000; partial exemptions available to $500,000   
  • Must be a Canadian citizen or permanent resident, and residing in B.C. for a minimum of 12 months.  

Legal Fees
Legal representation will cost you approximately $1100 for a purchase and a mortgage, add another $900 if you are selling a property at the same time.

Interest adjustment explanation: 
The interest adjustment date is the date from which your lender actually starts calculating the interest you’ll pay. It’s basically the date on which the term of your mortgage really begins.  Interest adjustment generally takes place on the 1st day of the month after the completion date.
For example, if your completion date is June 20th and you choose the monthly payment frequency option please see dates:

  1.  Completion date is June 20th
  2.  Interest adjustment date is July 1st
  3.  First full payment date is August 1st

Title Insurance/Survey Certificate
A bank will either require title insurance or a survey certificate.  The majority of banks are now requiring title insurance and the lawyer or notary you choose will be able to explain the differences and go over pricing.
Property Appraisal
The property is evaluated by a professional appraiser to determine the market value of the property. This is done on conventional mortgages (down payment is 20% or greater, private transactions and properties to be used for investment purposes.  This is to ensure that:

  • The lending institution is not over lending on the property and;
  • To protect the borrower from over-paying. Generally, a standard residential appraisal will cost $275. 

Property Inspection
An inspection is a thorough evaluation of the structure, systems and components of a home. The inspection report is usually multi-paged, and comments on the condition of, but not limited to foundations, electrical, plumbing, heating, water heaters, appliances, fireplaces, drainage, roof, walls, floors, attic, crawl spaces, patios, etc.  This report is for the sole benefit of the buyer and is not required by the bank.

Property Tax Adjustment 

  • Generally, property taxes for the calendar year are paid at the beginning of July.  If you purchase a property before July 1st, the seller will be paying you for the days they owned the home from January 1st to the completion date. 
  • You then are responsible for the entire amount to be paid to the municipality on July 1st. 
  • If you purchase a property after July 1st, you will pay the seller for the days you own the property from completion day to   December 31st, as they will already have paid the entire amount to the municipality on July 1st. 
  • To calculate this amount: one day’s taxes on owner-occupied properties are the annual taxes, less $570 (estimate) home owner  grant, divided by 365.

Insurance Binder 
This is a requirement by the bank to ensure that the borrower has arranged sufficient insurance to cover any 
losses that may be incurred on the purchase.  Proof of coverage by way of an insurance binder supplied by the insurance agent is necessary and usually costs $35.

Fire Insurance
The mortgage lender will insist that you purchase an insurance policy which guarantees that, in the event of fire, the home will be rebuilt to a standard that ensures the bank’s collateral is not in jeopardy.  Fire insurance is normally applicable to only houses and not strata units (ie townhouses and condos).

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

14 Mar

Mortgage Glossary

General

Posted by: Adam Hawryluk

If you’re feeling stuck on some mortgage language, take a look here! 

Amortization
A term used to describe the period of time over which the entire mortgage is to be paid assuming regular payments.

Appraisal
An independent assessment of the property by a qualified individual.

Assuming a mortgage
Taking over the previous owner’s (or builder’s) mortgage when you buy a property.

Closed mortgage
A mortgage that cannot be prepaid, renegotiated or refinanced prior to maturity unless stated in the agreed terms.

Closing costs
Costs that are in addition to the purchase price of a property and which must be paid on the closing date. Examples include legal fees, land transfer taxes, and disbursements.

Conventional mortgage
A mortgage where the borrower is contributing more than 20% or more of the value of the property as the down payment.

Debt service ratio
The percentage of the borrower’s income used for monthly payments of principal, interest, taxes, heating costs, and condo fees (if applicable).

Default
A homeowner is ‘in default’ when he or she breaks the terms of a mortgage agreement, usually by not making required mortgage payments or by not making payments on time.

Down payment
The money that you pay up-front for a house. Down payments typically range from 5%-20% of the total value of the home.

Equity
The difference between the market value of a property and the amount owed on the property. This difference is the amount a homeowner actually owns outright.

High ratio mortgage
A mortgage where the borrower is contributing less than 20% of the value of the property as the down payment.

Home inspection
A visual inspection of the major components of a home by a qualified individual, who will give the home buyer a true and unbiased picture of the home’s condition.

Home insurance

Insurance to cover both your home and its contents (also referred to as property insurance). This is different from mortgage life insurance, which pays the outstanding balance of your mortgage in full if you die.

Interest adjustment

The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage.

Land transfer tax also referred to as property transfer tax
A tax that is levied  on any property that changes hands.

Legal fees and disbursements

Some of the legal cost associated with the sale or purchase of a property. It is in your best interest to engage the services of a real estate lawyer.

Lump sum payment
An extra payment that you make to reduce the amount of your mortgage. This is the same as pre-paying, which you cannot do if you have a closed mortgage.

Mortgage
A loan that you take out in order to buy property. The collateral is the property itself.
Mortgagee/mortgagorMortgagee is the lender; mortgagor is the borrower.

Mortgage broker

A company or individual who helps the homeowner find the right financing to buy a property. A broker does not actually lend money but seeks out a lender and arranges the mortgage terms. This may include negotiating with the lender for the best possible deal for the homebuyer.

Mortgage default insurance
Required if you are contributing between 5% and 20% of the value of the property as the down payment.

Mortgage life insurance

This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.

Mortgage term

The length of time the interest rate is guaranteed for a mortgage. Mortgage terms normally rate from six months to five years or more, after which you can repay the balance of the principal owning or re-negotiate the mortgage at current rates.

Multiple Listing Service (MLS)
A computerized listing of the properties available in your area, including information and pictures of each property.

Offer to purchase/conditional offer
A written contract outlining the terms under which the buyer agrees to purchase the property. There may be conditions attached to the offer, for example, offer being subject to arranging the mortgage or selling a home.

Open mortgage
A mortgage which you can pay off, renew or refinance at any time. The interest rate for an open mortgage is usually higher than a closed mortgage rate.

Porting
Transferring an existing mortgage from one home to a new home when you move. This is known as a “portable” mortgage.

Pre-approved mortgage certificate
A written agreement that you will get a mortgage for a set amount of money at a set interest rate. Getting a pre-approved mortgage lets you shop for a home without worrying how you’ll pay for it.

Pre-paid property tax and utility adjustments
The amount you will owe if the person selling you the home has pre-paid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.

Pre-payment
Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a penalty for pre-paying.  Lenders typically allow anywhere from 5-20% pre-payment privileges without penalty.

Property survey
A legal description of your property and its location and dimensions. An up-to-date survey is usually required by your mortgage lender. If not available from the vendor, your lawyer can obtain the property survey for a fee.

Refinancing
Increasing the amount of your current mortgage, at a new interest rate. The term of the new mortgage must be equal to or greater than the term remaining on your current mortgage.

Renewal/renewing
Once the original term of your mortgage expires, you have the option of renewing it with the original lender or paying off all of the outstanding balance.

 
 
 
 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

11 Mar

Confirmation of Rental Income

General

Posted by: Adam Hawryluk

What is Confirmation of Rental Income?

Confirmation can be proven three different ways:  

1. T1 General (amount claimed on taxes)

2. Signed current lease agreement

3. Economic rent letter

Why do lenders require a Confirmation of Rental Income?

Lenders require confirmation that the rental income declared on the application is accurate. 

Where can I find my Confirmation of Rental Income?

Your confirmation can be obtained from your tax documents for your T1 General by scanning your current lease agreement. If you require an economic rent letter, I would be happy to obtain that on your behalf.

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.