31 Mar

You Want To Be A Landlord?

Mortgage Tips

Posted by: Yen (Frank) Feng

Are you dreaming about owning a rental property? Did you know there are advantages and disadvantages?

ADVANTAGES of Owning a Rental Property:

  • Earning monthly income
  • Allows you to build home equity
  • Tax deduction on all rental-related expenses

DISADVANTAGES of Owning a Rental Property:

  • Responsibility for maintaining the rental property and managing your tenant(s)
  • Higher tax bracket
  • Unexpected repair expenses
  • Capital gains tax when selling in the future

Need a mortgage? What to Know BEFORE You Buy:

  • Down payment: The minimum down payment is 20% of the purchase price.
  • No gifted money: Down payment must come from your savings.
  • Purchase with equity: You can refinance the existing equity in your primary home to purchase your investment property.
  • Not all can be used: Only a portion of the rental income can be used to determine the mortgage you can afford to borrow.
  • Pay the premium: Interest rate premium can range from 0.10% to 0.20% on a standard 5-year fixed rate.

Final Tips on Becoming a Landlord:

  • Rental insurance: Ensure you have proper coverage for a rental situation and cover any unforeseen events.
  • Laws and responsibilities: Acquire knowledge about the responsibilities of being a landlord in your province, including tenant laws and rental obligations.
  • Research rates and locations: Research mortgage rates and locations before so you are aware of the current market and its potential earning power.
  • Choose the right lender: Ask your mortgage expert so you can maximize your potential.
  • Hire a professional: If you have multiple rental properties, a property manager can be a great go-between with you and the tenants.

With the right purchase price and monthly rental costs, a rental property can be a great way to supplement income. If you are looking to purchase an investment property, be sure to reach out to your mortgage expert to discuss your options.

24 Mar

Selling Your Home in the Spring

Real Estate

Posted by: Yen (Frank) Feng

Looking to sell your home this Spring? Here are a few tips to help you make the most of the spring season!

1. Hire an Experienced Realtor: To get your home ready for the Spring market, consider hiring an experienced realtor who can guide you through the entire sales process. A good realtor can assist with preparing your home for listing, showing potential buyers, and finalizing the eventual sale. A realtor’s expertise can ease navigating the sales process with new safety protocols and virtual viewings.

2. Prioritize Repairs and Improvements:  Some minor repairs and improvements can make big differences in how a home appears to potential buyers. Before listing a home, it is important to go through room-by-room and address any issues. These can be fixing chipped paint, patching small holes in the wall, and updating old appliances. Correcting these minor issues can help a home truly shine when buyers walk through.

3. Clean and Stage Your Home: You can hire a professional cleaning service to clean and declutter your home to create a spacious and inviting atmosphere. Also, your real estate agent can help to stage your home for maximum impact.

4. Consider a Pre-Listing Inspection: A pre-listing inspection can identify any issues with the property. The inspector will conduct a thorough visual inspection of both the interior and exterior elements of your home.

5. Organize Your Paperwork: There is a lot of paperwork when it comes to selling your home. Keep all necessary documents organized and easily accessible for potential buyers. This includes permits, renovation or repair receipts, warranties, rental agreements, and copies of utility bills.

10 Mar

5 Reasons You Don’t Qualify for a Mortgage

Mortgage Tips

Posted by: Yen (Frank) Feng

When you are in the market for a mortgage, it is important to know the requirements for the qualification, also the reasons why you may not qualify. By understanding these reasons, you can make necessary changes and budget accordingly for the future.

Here are the top 5 reasons why you may not qualify for a mortgage:

1. Too Much Debt: This is the most common reason for mortgage disqualification. One of many measurements all lenders use is the Total Debt Servicing ratio (TDS). It calculates any form of debt, such as credit cards, lines of credit, or other loans, which lenders use to assess your eligibility. Ideally, your monthly debt payments should not exceed 42% (if your credit score is between 650-680) and 44% (if your credit score is over 680) of your gross monthly income.

PRO TIP: Reduce expenses, budget a plan, and consolidate debt when possible.

2. Poor Credit History: Credit score is another key factor in mortgage approval. Check your credit rating to determine what you qualify for before house hunting. A poor credit history poses a higher risk, making it harder to secure a mortgage loan.

PRO TIP: Improve your credit score by paying bills on time, avoiding exceeding credit card limits, or applying for multiple new cards.

3. Insufficient Assets or Income: A lack of sufficient income or assets to put towards your loan can make it challenging to qualify for a mortgage.

PRO TIP: Consider saving more money for your down payment, looking at suite income, or alternative lenders to increase your chances of approval.

4. Not Enough Down Payment: Not having enough money for a down payment is another reason for mortgage disqualification. A 20% down payment is required to avoid mortgage default insurance in Canada. You can also purchase a home with less than 20% and factor in the insurance premiums.

PRO TIP: Non-refundable gifted funds from immediate family members OR have a saving plan with government programs such as TFSA, RRSP, and Tax-Free First Home Savings Account (FHSA) if you are a first-time home buyer.

5. Inadequate Employment History: Mortgage lenders typically prefer a consistent 2-year employment history with the same line of work. Obtaining a mortgage may be more difficult if you have a limited employment history or do not have a long-term position.

PRO TIP: Stay with your current employment and do not make sudden career changes during the mortgage process.

Whether you are a first-time homebuyer or looking to move, understanding the factors that impact your mortgage application can help increase your chances of success.

If you have been denied a mortgage before, do not be discouraged. With the help of a trusted mortgage broker and some effort and patience, you can put yourself in a better position to apply again in the future. Contact me to discuss your options today.

3 Mar

5 Tips to Protect Your Finance During The Recession

General

Posted by: Yen (Frank) Feng

The latest news has highlighted rising interest rates, surging inflation, and economic uncertainty in Canada, leading to suggestions for a possible recession. To protect your future, consider taking the following steps:

  • Set a budget and reduce expenses: Set a budget and reduce monthly expenses and overall debt by reviewing your income and expenses. Identify areas for reduction such as cell phone plans, streaming subscriptions, and transport costs.
  • Consolidate debts: Make a list of your high-interest loans and consider consolidating them into your mortgage to save on interest and free up cash flow with one payment. Also, allocate a percentage of your income towards an emergency fund to provide breathing room in case of job loss or unexpected expenses.
  • Diversify investments: Evaluate your investment portfolio and consider diversifying it to help reduce risk. You can reroute your investment to real estate or other areas to ensure you have various sources of income, and always talk to an expert.
  • Explore extra income: Find additional income sources by exploring promotion opportunities, upcoming reviews, and transferable skills you can apply to consult or extra contract work.
  • Stay calm and adjust your crown: Remember not to panic and make appropriate adjustments to stay financially secure.

If you have any questions, contact your mortgage expert for guidance on the impact on your mortgage and making long-term changes.