My desk is clean, but I filed everything in the garbage

One of my goals this year fiscal year is to post more regularly on my blog. Over the last month I've had an amazing vacation with my family and attended a great conference that Todd Duncan hosted called Sales Mastery. As a result, things have piled up on my desk at work. I couldn't concentrate on the task at had, with the clutter on my desk. So I filed my clutter into the recycling box under my desk. My plan is to work through the pile later today.

Getting rid of clutter in your life and finances can help you get back on the path that you want. I met with a lady earlier this week that was moving, just to get ride of the clutter in her life and her house! The mortgage financing was tricky. I had to pull Home Trust into the deal. But with their great rates on 6-month open mortgages, the client will be able to purchase her new house first, move, de-clutter and repair her old house and then put it on the market to get a maximum sale price!

One thing I need to keep in mind though, is to ensure I get through my own recycle box today, so when the cleaning staff come that they don't "recycle" the papers in my recycle box, which I still need to review myself.

Please call or email me if you'd like to talk about "de-cluttering" your debt or finances, at tel: 519-763-3900 ext.1001 or e-mail: lastovic.s@mortgagecentre.com. 

How are you de-cluttering your life?

Secured lines of credit: What are they good for?

I’ve recently recommended secured lines of credit (or SLOCs) to a few of my clients instead of a mortgage.  SLOCs are similar to variable-rate mortgages, as the rate changes depending on the prime rate. However, SLOCs are also unlike variable-rate mortgages because: (1) only the interest is due on the payment date (instead of both the interest and principal), and (2) they are fully open (which means that they can be paid off at any time without a penalty).

Here are a few scenarios where it may be more appropriate to get a SLOC instead of going with a more traditional mortgage:

1. A SLOC could be for you if your mortgage is coming up for renewal and you are planning on purchasing a new house, or if you are not sure what your future plans may be

SLOCs are an inexpensive way to allow yourself more time to decide what you’d like to do with your home.  For instance, if you’re planning on moving within a year but aren’t sure about specific plans, SLOC’s can help bridge the gap until you’ve got a more solid “game plan.” Moreover, speaking with a mortgage professional can further help you plan out your next move – from a financial perspective.

2. A SLOC could be for you if you are planning a significant renovation on your home

You can incorporate renovations into your home through your mortgage, but if you’re planning a significant renovation you may want to consider a SLOC. A SLOC would allow you to pay your contactors as required, and would put you in control of the money – as opposed to your bank, for instance, which can be inefficient. Once the renovations are complete, a traditional amortized mortgage can be put into place. Your “new” property would then be appraised at that time to confirm the improved value, and an amortized mortgage would help you pay down the renovations in a timely and organized way.

3. A SLOC could be for you if you are investing equity from your home into a non-RRSP, or real estate

Whenever you use the equity in your home to invest in a non-RRSP or real estate, the interest on that portion of the mortgage, or SLOC, is a tax deduction. Because you may not want to pay off the principal on the investment loan, a SLOC could be a more appropriate loan than a traditional mortgage.

These examples are just some of the ways to best use a secured line of credit. Please contact me directly via e-mail at lastovic.s@mortgagecentre.com or call me at 519-763-3900 ext.1001 to discuss your questions. 

Two e-mail messages that stood out yesterday...

Yesterday I received two e-mails that stood-out in my inbox: one from Scotiabank letting me know that they are discontinuing their no-downpayment mortgage; and, the second message came from MCAP (a wholesale bank) letting me know that their maximum loan-to-value on a secured-line-of-credit would only be to 65% of the value of a home, instead of the 80% value traditionally lent.

While I was anticipating these changes later this year, they've come as a surprise because they happened quickly and without much notice.  Normally, when drastic changes happen in lending there is usually a lead-up of several weeks.  This allows borrowers to get their applications approved before the cut-off dates.  This time there was no far-advance warning.

What are the main implications on these changes?

• For real estate investors who would normally use the equity that they've built up in their homes to purchase investments, the amount that they can use from their home has decreased by 25%. Although there are other lenders who will still allow you to access 80% of the value of your home through a secured-line-of-credit, I think we'll be seeing most lenders drop their maximum loan-to-value to 65% down from 80%.
• For those who wanted to buy a house and had good job stability and credit, but have had difficulty saving for a downpayment, their chances of buying a home and getting good financing is limited.  Although there are lenders who will still do "no downpayment" mortgages, we'll likely see this program being cancelled with most mortgage lenders.

Your feedback and comments are welcomed! If you have any further questions that you'd like to discuss please give me a call or send me an e-mail:

Tel: 519-763-3900 ext.1001
E-mail: lastovic.s@mortgagecentre.com
www.guelphmortgagecentre.com

Think you can't qualify to buy a home...think again...

I just had a BBQ at my house and invited some of my clients to it. It was a great opportunity to get to know them better and to thank them for their business.  One message that kept coming up during friendly conversations at the BBQ, was that they were surprised they could get a good mortgage. A few of my clients had mentioned to me that they were turned-down for a mortgage at their own bank and even discouraged by their friends or family.

Have you wanted to buy home, but think you can’t qualify for a mortgage? Here are some common misconceptions about qualifying for a mortgage.

Myth:               I don’t have a down payment I can’t qualify for a mortgage.

Fact:              There are mortgage options for people with good credit history and job stability, but don’t have the full 5% for the minimum down payment. Some mortgage lenders will lend you the money for the down payment.  Rates are normally about 2% higher than the best discounted rate.  The rate would still be below 5.5% but you would not need a down payment!  This is a great way to get into a home, if you’re having a hard time saving for the down payment.

Myth:               I was turned down by my own bank before for a mortgage – I won’t be able to get one now.

Fact:             There are options for people who have been turned down by their bank, that are cost effective. For example, some banks will turn you down for a mortgage, if you haven’t been employed with the same company for a three full years. As a mortgage broker, if you have a full-time job and are no longer on probation, even if you’ve only been at the job for a few months, you likely would be able to get a mortgage.

Myth:               Mortgage brokers charge a fee. I should go to my bank first.

Fact:              Mortgage brokers have become one of Canada’s top choices for people looking to buy a home or investment property.  That’s because they offer great rates. If you have good credit and job stability you can get better rates through mortgage brokers and there are no extra fees!

If you're interested in how you can qualify for a mortgage please call me at 519-763-39 ext.1001 or e-mail me at lastovic.s@mortgagecentre.com

The Ant Philosophy and Real Estate

While waiting at my chiropractor's office yesterday, I watched Jim Rohn, talk about his "Ant Philosophy".  Jim Rohn is kind-of-like a preacher for business people and entrepeneurs. The Ant Philosophy is based on the habits of a common ant.  In the summer, ants work hard, and persistantly to gather up as much as they can for the winter.  In the winter they sit back and enjoy the fruits of their labour.

Many people who work in real estate, do the exact opposit of the common an.  It's natural to work hard during the spring real estate market and then do little in the summer. That's where I see real estate professionals, be it realtors, other mortgage professionals, home inspectors run into financial difficulty.

The Ant Philosophy is similar to Warren Buffet's mantra of doing the exact opposit of what others do.  If you've ever tried this in your own life, you'll see how challenging it can be.  Peer pressure is intense.

How does this relate to real estate and mortgages? For example, if you have a variable-rate mortgage with an amazing rate of under 3%, instead of riding out the mortgage because everyone is complementing you on the rate, look at locking in before rates go up...try the ant philosophy.

If you'd like to discuss your mortgage (or the Ant Philosophy), please call me at The Mortgage Centre 519-763-3900 ext.1001 or e-mail at lastovic.s@mortgagecentre.com.

Guelph’s unemployment rate dips once more

When it comes to buying real estate, it's important to be objective especially if you're considering it for an investment.

There are many key drivers that influence the phases of the real estate cycle.  Employment is one of the demographic drivers.  Other key demographic drivers include:

-Net migration;
-Vacancy rates;
-Housing Constructions; and,
-First-time homebuyers.

Today Stats Canada released unemployment rates for Canada, and Guelph as usual, has one of the lowest rates on unemployment in the country.

What does this mean for the local real estate market? When people have jobs, they buy homes.  That's one of the reason's why home sales are up year-over-year in Guelph.  Furthermore, when unemployment is low, people migrate to these cities for employment.  Guelph's vacancy rates are also at record lows.
 
GuelphMercury - Guelph’s unemployment rate dips once more

Buying a rental property for the wrong reasons...

One of my specialities is helping people build their their real-estate-investment portfolio. Because I'm in the business of owning and managing rental properties myself, most of my clients appreciate the fact that I have first-hand experience of what to do (and what not to do).  I've made several mistakes over the last ten years where I've lost money, but I have also had several success.  I'm proud to say that I'm finally making a decent profit.

I love Don Campbell's quote from the Real Estate Investment Network (REIN), "Real estate is not a get-rich-quick-scheme, it's a get-rich-slow-and-steady strategy". 

Here are some typical reasons people give for buying a rental property, that may be the wrong reason for purchasing (I'd love your feedback):

1. I want to supplement my income now. If you purchase a rental property and need to put a mortgage on the property to 80 per cent of it's value, you're likely not making more than $500/month on it.  I'm referring to the marketplace which I know best KW, Cambridge, Guelph, Brantford, and Niagara.

2. You want passive income. Owning a rental property is not a passive business.  There's allot of work that goes into managing a property and making money.  Depending on the property, it should take you an hour each week BUT you need to do some work each week per property.

3. You're retiring in a year. If you're retiring shortly and you're looking for something fun to do, then a rental property may be the way to go.  I've also helped retires buy properties to leave a legacy for their children.  If you have money to invest and want to make a "dividend" or supplement your monthly income, investing in a private mortgage is a good alternative.