london ontario community

Mortgages and Entrepreneurs

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Mortgages and Entrepreneurs London Ontario

When we are talking about mortgages, most of us assume it is about families and having a stable income that can pay off the mortgage after a certain time. What is rarely talked about is mortgages and entrepreneurs and their plans; as we know being self-employed means your salary can vary monthly, versus being an employee at a company with stable pay.

Back in July of this year, the CMHC announced the implementation of new mortgage lending rules designed to help the self-employed secure mortgages and maintain their position in Canada’s housing market. This will all take effect on the 1st of October this calendar year!

Self-employed Canadians have faced many obstacles when trying to obtain loans, primarily due to their variability of incomes. Since those that are self-employed are not on a payroll, lenders required a more rigorous proof of income, including but not limited to requiring at least two years of proof of income, audited financial statements, a good credit history, regular and stable patterns of income, and a large deposit for the home they are seeking to purchase. Sounds complicated, right?

One of the most difficult barriers to overcome in securing a mortgage is the very reasonable inclination of a small business owner (and their accountant) to do everything legally possible to reduce taxable income to reduce the amount of tax paid by the self-employed. In the case of obtaining a mortgage, the self-employed ideally needs to demonstrate the largest possible income to help to secure a loan. The two purposes are conflicting, with no clear solution.

To address the inequities and difficulties faced by the self-employed, the CMHC has proposed the introduction of several new, more flexible factors that can be used by lenders to assess the mortgage application of a self-employed person. Lending institutions will now be able to include factors such as enough cash reserves, the acquisition of an established business, and their training, education, and previous employment experience, including for businesses that have been operating for less than two years.

With these new changes, these will greatly assist not only self-employed Canadians, who according to the CMHC represent 15 percent of the workforce, also young entrepreneurs seeking to enter the housing market for the first time.

My Mortgage Application Was Denied, Now What?

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Mortgage Application was denied, now what?

Owning your home is not only a dream but a financial goal for many in Canada. However, factors like housing prices, interest rates, and new mortgage rules that came into effect have made it a little more difficult to get a home.

If you have recently had your mortgage application denied you may be wondering about some of the next steps you can take. Before you put your dream on hold, here are a few things to consider

Why was your mortgage application denied?

The first thing to consider after your mortgage application was denied, was why it was rejected in the first place. Your credit report or credit history may be one of the reasons. A low credit score can sometimes act as a warning sign to your lender. It would be a good idea to check your credit report to see whether it is accurate and then get to work on improving that credit score.

Proof of income might be another reason why you may not get that mortgage. For those that are self-employed or business owners, it may be a little more difficult to get approved for a mortgage, as lenders most often associate them with unpredictable income and are a higher risk.

The amount of debt you have can also affect your ability to get approved. Lenders will look at something called your debt service ratio when considering your mortgage application. Your Total Debt Service Ratio (TDS) is calculated by adding your family’s monthly mortgage payments, property taxes, and other debt payments, then dividing it by your family’s gross monthly income.

Is it really time to buy?

If your mortgage application was denied and you have considered the reasoning behind it, it is probably a good idea to double check to see if it is an appropriate time to buy a home. If right now you find that you have a lot of debt and are having difficulty paying some bills on time, it may be worth it to pay off some of that debt and set up a budget to put towards your home purchase. If you have however gone through your finances and figured that right now is a good time to buy, you can consider other available options.

What other options are available?

It is a big misconception when it comes to big banks and mortgage loans. There are other lenders available. Not only are there other lenders out there, some of them include: mortgage companies, insurance companies, trust companies, loan companies and credit unions.

Mortgage Brokers can help

If your application was denied, an experienced mortgage broker can work with you to help determine if it is indeed a good time for you to buy a home. They can help investigate some of the alternative options available Mortgage brokers negotiate on your behalf and have relationships with various lenders. Meaning a mortgage broker can help get you approved, even if your first application was denied.

Breaking Your Mortgage Early

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breaking your mortgage early

Sure, it started out great, it got you the home you dreamed of and met your financial needs… back then. But things have changed, now you are probably looking to start a brand-new mortgage and end this one.

Why break it?

Mortgage break ups can happen for a variety of reasons. Life changes, things happen in your life, maybe you need a bigger home to accommodate your growing family? Maybe you need to move for your new job (which is in a new city). These are some common reasons why people may need to break their mortgage before the five years are up. A decrease in interest rates, while giving you the ability to save some money is also another common reason to break your mortgage early.

Why you may want to break it

When interest rates drop, it may be tempting to see what other options are out there for your mortgage. A lower interest rate means that your mortgage payments will be reduced each month and you’ll save money in the long-run. On the opposite end though, if you do stay with your mortgage you may be able to pay off your mortgage earlier.

You should be careful when you are looking at your options. There are some qualified professionals to go to (like myself) that can help you determine which route you may want to go. It is important that you are aware of the negative impacts of breaking your mortgage early. there are penalties and fees attached when you decide to break your mortgage contract that could mean that you end up not saving any money at all. Don’t forget that you may now need to pass the new mortgage ‘stress test’ to qualify for a new mortgage.

So, what happens when you decide to break your mortgage early?

So, you decided it is time to break your mortgage. Typically, penalties for breaking a mortgage agreement vary depending on the type of mortgage and the type of lender. In many cases, a smaller lender and a variable mortgage have lower penalty fees that bigger lenders and fixed-rate mortgages.

When it comes to paying the penalty, the penalty amount you will need to pay is calculated using something called an interest rate differential. You’ll likely end up paying the interest for the remainder of the term on the remaining balance, or the amount of three months’ interest on the remaining balance – whichever is greater.

Still unsure about if you should break your mortgage? Contact me today and I will go over all the options you have!

What’s The Deal? Organ Donations

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Organ Donations Community Mortgage Movement

I’m Andrew Young of Mortgage Wise Financial and Community Mortgage Movement.

What’s the deal with Organ Donations?

So, on May 20, 2018 I turned 40, which is kind of a big deal and calls for a celebration. With me turning 40, it also meant that I had to renew my license through Service Ontario. The fee to get my picture taken was $90 alone, that made me angry.

However, on a more serious note, I received an organ donor reminder in the mail. I would like to talk to you today about Organ Donors. I myself am an organ donor and have been ever since I got my driver’s license. If you can, I highly recommend being an organ donor.

I would also like to mention how important this day means to me, as my father passed away 7 years ago today. He donated his retinas to this beautiful little girl. Because my dad was an organ donor, she now can see now. Even after passing, my dad was able to make an impact on someone else’s life. I personally feel like it is so important to be an organ donor!

Here are some facts about organ donations:

Age alone doesn’t disqualify you from being an organ donor! Did you know that you one donor can save the lives of up to 8 people! They can also enhance the life of up 75 people through the gift of tissue.

Your current or past medical history does not prevent you from registering to be a donor. Individuals with serious illnesses can, sometimes, be organ and/or tissue donors. Each potential donor is evaluated on a case-by-case basis.

All major religions support organ and tissue donation, or respect an individual’s choice.

Check out https://www.beadonor.ca/ to learn out how you can be an organ donor today! It only takes 2 minutes!

New Mortgage Rules and Their Effects

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Mortgage Rules

The Canadian Government announced that it would be changing the rules regarding mortgages for Canadians. This new rule would came into effect on January 1, 2018 and how Canadians are approved for mortgage loans for houses.

 

Rules for Insured Purchasers

Currently anyone who purchases a home with less than a 20% down payment is required to pay a one-time insurance fee to the bank. This fee is simply just reassurance to the bank, in the case that a mortgage payment cannot be made. However, under the new regulations, buyers will still have to pay the insurance fee, but they will also have to be pre-approved for a higher interest rate. This rate will be at least 2% higher than the initial mortgage rate that they negotiated. First time home buyers will need a higher amount for a down payment and prove they can attain that extra 2%.

 

Rules for Uninsured Purchases

Under the current rules anyone who purchases a house and puts a down payment of 20% or greater of the mortgage is not required to purchase insurance from a bank. However, with the new legislation, even those who hold a down payment of 20% or greater will be required to pass a “stress test,” now meaning they will have to qualify for a rate 2% greater than what they had initially negotiated.

 

Effects for Current Homeowners

Under the new regulations, current homeowners will be exempt from the stress test, but this is only if they choose to stay with their current institution. Implementation of this regulation means that when homeowners are eligible to renew their mortgage, current homeowners will be restricted from discovering new lower rates.

 

Effects for First Time Home Buyers

The changes to regulations have caused some changes in the real estate market. First time home buyers with 20%. This means that more homes are now being purchased a little more quickly than before and the new regulations will not affect these buyers. It can be difficult to plan, especially for first time buyers.

Community Mortgage Movement Charity Highlight: Growing Chefs

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Growing Chefs

Growing Chefs! Ontario is a registered charity based out of London, Ontario. They unite chefs, growers, educators and community members in children’s food education projects.

Growing Chefs! Was founded by Merri Schwartz, a professional pastry chef in September 2006 in Vancouver, British Columbia. She founded Growing Chefs! as a tool to connect those chefs and growers to local communities, using a fun, empowering, educational program to do so. After getting involved with the program, restaurant manager Andrew Fleet began the pilot for the second chapter of Growing Chefs! in London Ontario.

For 10 years Growing Chefs has been working in the London, Ontario community to help get kids excited about cooking, preparing and sharing healthy food together. The charity has been running programs within schools for about 10 years, as well as several community agencies in London.

One of Growing Chefs’ main goals is to help provide an avenue for chefs and growers to get more involved in the community and help with supporting food education. They also look to provide children in the community with the knowledge and confidence to grow, prepare good and healthy cuisine.

One of the programs that they offer is a hot lunch program for several of the schools within the London, Ontario community. Through the use of their commercial kitchen – the Beet Cafe They prepare and deliver over 27,000 lunches hot and healthy lunches each year. They also offer recipes and educational classes for children

They host a variety of Food Education Projects and each month they offer events their own signature meals. These events are open to the public and the menu for these events are carefully crafted, with fresh local ingredients.

Remember that Growing Chefs is a grassroot organization and would not be able to function without the help of the community and volunteers. If you are looking to volunteer your time be sure to head over to their volunteer page and see the available volunteer positions.

Community Mortgage Movement Supports Local Businesses

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Shop Local Community Mortgage Movement

Everyone can make an impact on their community by helping to shop local and supporting local businesses. While small businesses generate new jobs and they’re also an asset to the local community. Here are some ways that small businesses help to improve the community:

Shop Local

Shopping local is great for the community. Local businesses are the backbone of the economy and community. Two or three times as much money spent stays in the local community when you buy locally made goods or services rather than chain stores.

Community Identity

Take a stroll down the main street of your city and town and you’ll most likely notice that each community has its own unique and local charm. All types of small businesses help to contribute to a community’s identity. Many municipalities and tourism boards have prioritized preserving the unique character a vibrant small business community creates– transforming that character into an advantage.

Create Local Jobs

When you shop at and invest in your local business you create more jobs in the local community. Small businesses are local job creators and most of the jobs are local. This of course is better than having to commute to a different city, employees can work closer to home. When a community has a vibrant commercial centre, it helps to create an ample opportunity for these workers to shop at local businesses. For example, an employee might take a lunch break or grab a drink from a local bar. This keeps the money local and further creates a tight knit community.

Diverse, Locally Made Products and Services

One of a kind and locally made products can attract customers to a community,

Locally made goods are also very attractive to residents of the city that want to lower their carbon footprint, support local businesses and make sure that their tax dollars are kept closer to home.

Community Involvement

Small businesses are an integral part of the community they live and work in. Therefore, they tend to be aware of how their decisions will impact the community. In addition, local shops tend to be involved in the community and may help to sponsor local events or local sports team, even help with volunteering throughout the city.

These of course are just a few examples of how small businesses are important and help the local communities they are a part of.

These establishments help to benefit our local economy, personal relationships and help with building the local community. So why not join in and help with #SmallBusinessSaturday and shop local, while supporting the London community!