A healthy credit score will help you get the best mortgage rate possible. With the rise in identity theft, it is common to find errors on your credit report; if mistakes are made, they will show up on your credit report once it is pulled. The government of Canada’s Office of Consumer Affairs (OCA), recommends that you request and review a copy of your credit report from credit-reporting agencies once or twice a year. Canada has two credit reporting agencies, Equifax and TransUnion.
It IS Possible to Retire Mortgage Free
It is never too early to think about retirement. If you are looking to retire mortgage free, there are steps that can help you prepare and achieve your goal. The ability to do so is often based on affordability and preference. Retiring mortgage free can make a limited pension – one that is substantially less than your salary – go much farther.
The benefits of retiring without a mortgage allow you more financial freedom, getting the most out of your savings without having to reimagine your desired retirement lifestyle. Continue reading “It IS Possible to Retire Mortgage Free”
In an economic downturn, everyone is being more careful in re-evaluating and managing their finances. Some are finding themselves out of work, drowning in credit card debt, and unable to make their minimum monthly payments. Or perhaps you simply want to lower your expenses as a means of smart money management and build your savings… just in case. Regardless, there are ways to protect your credit score and release the financial pressure you may be feeling in our current economic condition. If you are among the newly unemployed, are looking to lower your monthly payments, get rid of high interest credit card debt, or simply free up some cash, you should be looking into equity loans and refinancing.
So you’re thinking about buying your first home.
You’ve started to look at the market, maybe even contacted a Real Estate Agent and stopped by a few Open Houses, but have you properly assessed your financials in order to get the home you want?
Don’t be Caught Unprepared with Your Mortgage Payments
Canadian Mortgage Professional (CMP) Magazine has released its annual issue of “The Hot List” for 2015, honouring the top mortgage professionals powering through the mortgage industry. This list features some of the most successful, innovative, and engaging mortgage professionals all across Canada. From regular joes to CEOs this list of brilliant individuals are all revolutionizing the mortgage game.
It comes as no surprise that ACLending Group’s very own, Alim Charania, has been highlighted on CMP’s Hot List. Alim has also been acknowledged by CMP in the past as a “Young Gun” two years in a row in 2014 and 2015. He has been steadily rising in the ranks since being named Rookie of the Year by Dominion Lending Centres Network in 2012.
Alim started out in the banking industry and has accumulated over 14 years of financial experience. He has completed and passed the Accredited Mortgage Professional (AMP) program and received the AMP designation. With the help of his banking background, Alim is well versed in many products and services offered by different financial institutions. Within the last few years Alim has become one of Calgary’s top mortgage professionals, funding $22 million in volume in just one year in 2014!
Past or present, Alim always treats his clients with the utmost respect and puts their needs first. Alim will address any borrowing concerns clients may have and provide them with simple and clear solutions. He makes himself available 24/7 all year round to answer any questions or simply to offer financial insight to anyone thinking about purchasing a home. See what Alim has done for others: you can watch live testimonials on his YouTube channel here.
Take a look at Alim’s write up from CMP Magazine!
To view the full issue of Canadian Mortgage Professional Magazine, click here. (You can find Alim on page 34.)
When your children are young you can hardly imagine wanting them to leave home. But as the years go by and they mature into adulthood, it is inevitable for them to leave the nest. Help them prepare for the financial situations they may encounter in the near future by discussing these 5 major aspects of finance.
- How to Save
Learning how to save can arguably be one of the most important habits to cultivate in your life! First things, first: saving has absolutely nothing to do with how much you earn. Whether you make a six-figure salary or an hourly wage, any type of income can lead to a growing savings account. Get into the habit of putting small amounts of money aside. Try setting up an automatic withdrawal on a monthly or biweekly basis from your main account into a savings account. This will keep you from spending money that was meant to be saved. Chat with one of our AC Lending Group experts for more financial planning tips and advice.
- How to Ace The Credit Report
You’ve heard countless times that your credit report is your financial report card – but what does this really mean? In order to qualify for a mortgage you must have a minimum of 2 records on your credit report from credit bureaus. A mortgage lender will be looking at this information during the mortgage application process. Be sure to maintain a proper credit score in order to qualify.
Here’s how you can start building a strong credit score:
- Be mindful with credit card use. Credit cards are not good or bad – it’s up to you and how you use them. Think of credit cards as a tool in your financial planning process. If you use them properly, i.e. not overspending your limit, they will help your credit score in the long run.
- Pay your bills on time. You will also avoid any interest rates associated. Few people realize that cell phone bills also show up on your credit report, so be sure to pay these in a timely manner as well
- Do not pull up your credit report often. This is can be an indication that you could be seeking additional credit or loans.
To learn more about credit reports and why they matter, have a read of our other blog post here.
- How to Manage Expenses
Spend wisely! Everyone knows this rule but few abide by it. Take the time to consider and research any large purchases you want to make – can you really afford a brand new vehicle at the moment? Is a new smart TV worth putting a dent in your savings and prolonging on purchasing your own home?
- How to Think Long Term
Now that your credit is solid and you have enough saved up for a down payment on a home – it’s time to decorate. You have come so far, don’t let everything you have learned about financial planning slip away. Think about where you want to live five years down the road. Will your home be in the right location or the right size for your future lifestyle? If not, think about ways to save on renovation and decorating costs, your new home can easily become a rental property in the future. This is a great way for you to make some extra money to put towards your next downpayment.
- How to Capitalize on Opportunities
Now that you have secured your own home; you have utility bills, mortgage payments, and other expenses to cover. Have space for a roommate? Having someone move in with you generate additional income to help you with those bills.
So you’ve been turned down by the banks for your mortgage application and you’re now seeking professional expertise to help you qualify for a mortgage. In most cases, an independent mortgage expert can help review your situation to get you in a better position during your mortgage application. Here are 5 common reasons for being declined by the banks.
- Short on the Down Payment
The minimum amount you must put down when purchasing a home is 5%. If you are looking to purchase a rental property or refinance your current home a 20% down payment is required. Mortgage applicants must come up with the funds on their own or get help from a friend/family member. Any funds received from a lender cannot be used as part of a down payment. Be sure you save enough to meet the minimum amount for the home you are looking to purchase.
- Limited Income
Sometimes the reason you get declined for a mortgage is simply because you are not earning enough money. Your income must be enough to cover a mortgage payment, property taxes, condo fees (if applicable), any existing debt, as well as have enough money to sustain your everyday expenses. Some lenders may allow you to add other sources of income, or add a person on the title to increase your chances of qualifying for a mortgage. You can discuss any of these mortgage application options with a mortgage professional.
- Problems with Credit
That unpaid parking ticket may be coming back to bite you. You might not be aware of it but quite a number of items can affect your credit score on your credit report. Some examples that contribute to a lower credit score are:
- Late credit card payments
- Going over your credit limit
- Pulling up your credit report often
- Any debts sent off to a collection agency
The worst of them all is bankruptcy, which has a great impact on your credit score and can stay on your report for as long as 7 years. To learn more about credit reports and why they matter, check out our other blog post here.
- Overwhelming Amount of Debt
The bottom line is that you are spending way over your budget! With credit card debts on the rise and many people turning to lines of credit, people are quickly accumulating an overwhelming amount of debt. You should pay off a majority of your debt before even filling out a mortgage application. Start saving! Put away a small percentage of every pay cheque into a personal savings account or consider opening a Tax Free Savings account.
- Changing Mortgage Rules
The mortgage world is always changing: rates are changing, housing prices are changing, and that means mortgage application qualifications are changing. For example, if you plan to make less than a 20% down payment, the new rules will adjust your debt servicing ratios and amortization. This tightens the qualification pool equivalent to as if the interest rate went up 1%. Speak to a mortgage expert if you think you might be affected by the new mortgage rules.
Remember to take all these factors into consideration and be prepared when applying for a mortgage. Don’t be discouraged if you don’t qualify right away, talk to one of our trusted Calgary mortgage experts at AC Lending Group to help you get started.
A credit report is a record of all your credit history from sources such as: banks, credit card companies, collection agencies and, of course, the government. Your credit report and other sources are used in a mathematical algorithm to achieve your credit score, a term you may be familiar with.
In this day and age it’s rare to find someone who doesn’t have some form of credit. Credit comes in all forms like in credit cards, personal loans, lines of credit, car loans, student loans, mortgages and more. A credit score stems directly from your credit report. These all count for something when it comes time to make that special purchase. Getting sucked in by tacky TV advertisements with hollow promises of getting approved for loans despite having less than stellar credit, is not how you want to end up. A bad credit score can make life difficult and a credit report establishes your level of credit worthiness. That is why it matters.
Your credit report tells the story of your repayment habits and also reports on things like if you paid on time, late or not at all and even a collections agency is after you. When there has been a bankruptcy or consumer proposal your credit report holds information of when a creditor wrote of the debt. They also record how well you are making your mortgage payments.
Another important thing your credit report shows you is how much of your available credit has been used. So if you use up a majority of your credit card limit, there is an assumption that you may be tight on funds. Maxed out and over the limit debts leave a bad impression for credit issuers and mortgage lenders in the future.
There are several categories of lending institutions. The most desired interest rates and terms found solely with prime lending institutions are generally only available to those with the best, ie. highest, credit ratings. Some prime lenders are banks, monoline lenders (available through mortgage specialists), credit unions and more.
A bad or low credit report leaves you in the hands of “subprime” lenders whose rates and terms are higher and often brokerage and lender fees apply. These lenders also offer opportunities designed to assist those having difficulties with their credit and find themselves stuck. “Subprime” lenders are often used in short term until one can qualify for prime lenders.
There are circumstances where private lenders are also utilized. A good mortgage specialist will be able to assess the situation and tell you when this is necessary. Of course, you will be notified well in advance anytime a fee will be charged by the broker or the lender.
Here’s what makes up your credit score and what impact they have on the bottom line. Payment History (how well you paid), Credit Debts (how many debts you have and how much they are utilized), Age of accounts (how long you’ve had these debts, the longer the better), Type of credit (they all impact differently, Credit Enquires, (are you a shopper spending lots of money, or in trouble?).
To find out how long negative comments stay on your credit bureau, check out this page on the Financial Consumer Agency of Canada’s website.
The biggest threats to your credit score are payments later than 30 days, maxed out credit cards, collections, proposals and bankruptcies.
The moral of the story, actions speak louder than words, don’t let your financial mistakes or slip ups define you. Keep a close eye on debts, ensure payments up to date, don’t overextend yourself and if you are having issues, talk with an advisor before it gets out of hand. There are many ways to prevent a credit rating breakdown, AC Lending is just the place to start.
Sometimes no matter how much we plan and prepare, life still does not go accordingly. This is why we have financial resources to help us get back on our feet.
Remember that there are no quick fixes to get back on track. Every situation is unique, so make sure you have the right knowledge and resources – really get to know how the mortgage and credit world works, and use a mortgage planner along with your trustee or debt counsellor to set up a plan of action that works for you.
Here’s a guide on how to qualify for a mortgage after the consumer proposal.
There are 3 main factors that banks look at when deciding if a mortgage will be granted to a consumer:
- Income of the household
- Debt-to-income ratio
- Credit score
For those currently in consumer proposal:
- You can refinance your home when in a consumer proposal and pay it out. You need more than 20% equity to do this.
- If you choose an INSURED mortgage (i.e. 5 – 20% down) then you must be discharged from consumer proposal for two years and your credit has to be re-established.
- Most lenders want the consumer proposal paid in full prior to mortgage approval. Very few will look at your deal while in proposal.
- Approvals are area-dependent – Fort McMurray or small rural communities are harder to get mortgage approvals.
- Don’t be house rich and cash poor. Plan to have savings that are more than just your down payment if you are buying.
- Make sure to remove your consumer proposal from credit bureau after you have made your last payment, or else it will keep hurting your credit score.
Rebuilding your credit.
Start rebuilding your credit as soon as you file your consumer proposal. You need to aim for TWO credit cards, open for TWO years, with an eventual available credit of $2500 each. Click here for a list of applicable credit cards.
Lenders use a method called the 5 C’s of credit to determine the credit worthiness of potential borrowers. It attempts to gauge the chance of default or the borrower being a chronic mismanager of debts. The 5 C’s assess your situation, who you are, why you had issues, and what you have done to improve the situation.
- Character – When lenders evaluate character, they look at stability: how long have you lived at your current address? How long have you been in your current job? Do you have a good record of paying your bills on time and in full? If you want a loan for your business, the lender may consider your experience and track record in your business and industry to evaluate how trustworthy you are to repay.
- Capacity – This includes your other debts and expenses. Creditors evaluate your debt-to-income ratio (how much you owe compared to how much you earn). The lower your ratio, the more confident creditors will be in your capability to repay the money you borrow.
- Capital – This is your net worth: the value of your assets minus your liabilities. In layman’s terms, how much you own (e.g., car, real estate, cash, and investments) minus how much you owe.
- Collateral – In the case the borrower is unable to fulfill the loan payments, a lender has the right to take ownership of assets of the borrower (such as a home), as previously agreed by both parties. Some lenders may require a guarantee in addition to collateral. This means that another person signs a document promising to repay the loan if you can’t.
- Conditions – Lenders consider a number of outside circumstances that may affect the borrower’s financial situation and ability to repay, such as what’s happening in the local economy. If the borrower is a business, the lender may evaluate the financial health of the borrower’s industry, local market, and competition.
Qualifying for a mortgage post consumer proposal may seem difficult, but it all starts with having the right knowledge and the right resources.
If you are looking to rebuild your credit or consolidate your debt, give us a call at ACLending Group – our mortgage experts would be happy to help. (403) 831-7869
Dominion Lending Centres – Accredited Mortgage Professional
Kiki is part of DLC Hilltop Financial based in Langley, BC.