31 Jul



Posted by: Brad Lockey


I have many friends that shop online and go to dozens of different sites in order to save a few bucks on books, TVs, appliances, etc. Is this a good idea? It definitely is if the savings are worth it and you don’t mind taking the time out of your busy day to do all the research.

What about buying a home and getting a mortgage?

This is one clear-cut example of why you absolutely need to spend time and do your homework when getting a mortgage. Yes, getting an excellent rate is one part of it, but there are costs that can surface down the road without you even thinking of it now, which can cost you a lot more than you think (I’m talking about mortgage penalties).

Lucky for the consumer, your Dominion Lending Centres Mortgage Broker does this work for you. Your Mortgage Broker has access to dozens of financial institutions, corresponding to hundreds of mortgage products… this means that you really do have a one-stop-shop for shopping around. Your Mortgage Broker is an expert at mortgages and will give you the best deal around for your specific situation.

On the other hand, many clients do choose to consult their bank first; that’s ok! However, if you do go to your bank, it’s best to be armed with the right questions:

Ask the bank representative how many mortgage clients they’ve had and how long they’ve been in the banking industry.
Ask if he/she plans on being in that same position for a while or if they’re working on a promotion (or even leaving the industry). This is important so that you know if the person will still be there once you find your place and if they’ll be around in the future if you have any questions. I used to work at a bank and that was the number one complaint from clients (that bank representatives are always moving around). It’s not their fault. They just want to get promoted and keep moving up the ranks.
Ask how their bank registers the mortgage (collateral vs standard charge) and what the differences are between the charges.
Most of us want to pay down our mortgages faster, so ask about pre-payment privileges and how it works.
Ask about the different types of mortgage terms and rates.
Most importantly, ask how prepayment penalties are calculated and ask for an example. This is important as down the road you may have to get out of your mortgage before the maturity date.
After you visit your bank, go and contact your local Dominion Lending Centres Mortgage Broker and ask them the same questions.

In just  two or so hours – an hour at your bank and an hour with your Dominion Lending Centres Mortgage Broker – you would have covered 230+ lending institutions. To be clear, you would have covered one lending institution with your bank and 230+ with Dominion Lending Centres!

In my opinion, spending the two hours can potentially save you many headaches and thousands of dollars down the road.

31 Jul



Posted by: Brad Lockey

Around the end of May 2014, the market started to experience a declining trend in mortgage rates. Though the housing market was already superb, professionals in the industry began gearing up for an influx in home buying. Their predictions were correct and we’ve seen more and more houses of higher value being sold since that time.

When an area with a hot market such as Vancouver, Calgary and Toronto experiences a mortgage rate decline, many renters make the hasty decision to purchase a dwelling before the rates jump up again. Though you could get a great deal, you need to ask yourself if you’re truly ready for everything that home ownership entails.

Here are 6 key ways to decide if it’s the right time for you to buy.

1. You’re Ready to Commit

When looking to buy a home you need to consider your future. Do you see yourself living in the home for at least three to five years? This is the minimum ownership time you need to consider as it takes three to five years to regain your buying and selling costs. If you were to sell before you’ve recovered those costs then you may lose money and could be liable to pay capital gains taxes. Unless you’re sure that you can commit to a place for a few years then it’s better to continue renting until you’re more settled.

2. Budgeting is Second-Nature

Mortgage payments are bound to be your biggest monthly expense, but they aren’t the only payment you’ll be liable for when purchasing a home. You also need to factor in the insurance, property tax, and condominium fees if you live in a shared building. All of these expenses add up and you need to have solid budgeting skills to keep your finances in order so you know what you can afford. Always go into home buying with a budget so you don’t end up looking at homes out of your price-range.

3. Your Finances are in Order

Home ownership comes with an extremely high price tag and you need to be 100% sure you can afford it. Before buying a home, make sure you have a reliable job and income. Your expenses will come due every month no matter what changes your situation may experience. If you can’t pay them, you could end up losing your investment and going into debt. Besides the income security, you also need to make sure you have little to no debt and good credit. These two aspects are the things a mortgage professional will look at first to make sure you’re financially stable and won’t have problems making payments.

4. You Have Savings

Homes don’t just have mortgages, they have down payments and hidden costs. You need to have a sizeable savings account to ensure you’re prepared for the initial and unexpected costs your investment will most certainly bring. Having a large down payment helps get you a lower interest rate, therefore, saving you money in the end. A large down payment typically means 20% of the home’s value. You also need to have an emergency savings fund for those unexpected costs, such as repairs, or in case you don’t have an income for a period of time if you get laid off.

5. Everything has been Researched

Do you know what the past and current mortgage rate trends are? Have you looked into what they’re predicted to do in the future? Do you know what kind of home you want and what they’re currently selling for? These are all things you need to know before buying your first home, plus much more. Make sure to do your research to ensure your investment is a sound one.

6. You’re Prepared to be a Landlord

Are you ready to take on the responsibility of a landlord? No longer will you be able to call up your manager to come unclog the toilet or fix appliances that have broken. All those tasks will fall on you and could be rather time consuming. You also need to be prepared if you plan on renting out the home to tenants in the future. This will involve collecting money and being on-call if the renters need anything.

If you’ve said yes to everything on this list then you could begin seeing mortgage and real estate professionals to begin the home buying process! If however, you weren’t confident in one or more areas on this list then you need to take some time to resolve any barrier that may be in your way. You could also make appointments with real estate agents and Dominion Lending Centres mortgage professionals to discuss what your options are and what you can do to prepare for home ownership. It’s always best to take a little extra time to make sure that your investment is something you actually want, at the right time, and for a price you can afford.

Happy house hunting!

Brad Lockey
Mortgage Agent, Lic #M11002365

21 Jul

Buying Your First Home in Canada


Posted by: Brad Lockey


What Newcomers Need to Know!

The reason I write blogs and share information is to educate my clients and prospective clients about mortgages. Obviously there is a lot to know about mortgages, financing, and buying property, and there are a lot of great ways for me and the other Mortgage Professionals from Dominion Lending Centres to share this information with you.

Lenders, insurers and associations also produce information that is worth sharing, therefore, along with my own ideas and knowledge, I also share interesting and useful information from other sources.

Here is a document produced by Canada Mortgage and Housing Corporation (CMHC) that outlines some of the things you need to know about buying your first home if you have recently immigrated to Canada. Of course if you have any questions specific to your situation, I would love to talk with you and help you figure out a plan to buy your first home.

Brad Lockey


CMHC Buying Your First Home

20 Jul

Determining Your Credit Score


Posted by: Brad Lockey

People are always confused when it comes to their credit score.
What is it?
What does it include?
How is it calculated?
These are all great questions that I will answer for you!

Having a great credit score can save you thousands of dollars, if you know how to manage it. There are two main agencies in Canada that report credit scores: Equifax and TransUnion. Both of these agencies collect information on a daily basis from millions of people through consumer credit agencies including phone companies, mortgage lenders, banks, credit card companies, and independent lenders.

Both of these companies analyze all the data they receive and use it to determine each individual’s credit score. To get a well-rounded credit score, it is most beneficial to have two active trade lines in addition to a mortgage and cell phone plan. The score you receive is based on the following percentages:

35% Payment History
This portion looks at your payment deadlines and if you pay on time every month. The score from this section remains positive as long as you maintain set payments on fixed loans and always make at least the minimum payment on credit cards. This information is kept on file for 7 years from the date of last activity.

30% Utilization
This portion looks at the amount you use on your available lines of credit and credit cards. Ideally you do not surpass the 50% point on any of them and do not need to apply for high credit limits, both being red flags for financial trouble.

15% Length of Credit History
For all financial lenders, a clear history for at least two years is the most favorable situation to show your security. This proves to the lender that you are a low risk applicant.

10% Credit Mix
The credit mix looks at your current loans and credit cards you use. Ideally, having at least one credit card with a $2500 limit and a fixed loan (i.e. house or vehicle) allows the lender to see your level of responsibility on different credit sources to base your score on.

10% Number of Inquires
This can be an area of concern if you frequently inquire about credit opportunities.  If you apply for multiple credit cards, an overdraft on a bank account, and/or a line of credit it can be a red flag that you are experiencing difficulties. If you are just looking for a new method of credit do not worry as your score will only take a minor, temporary hit. If, however, you are constantly inquiring about credit options then your credit score will take a dive.

To learn about the status of your credit score you can write to either Equifax or TransUnion for a free copy at any time. Writing to them will take a few weeks, so if you are strapped for time you can check out a website that will charge you a fee to see your credit report immediately.

If you have any questions about credit scores contact me and I can guide you through it!

Brad Lockey

17 Jul

5 Things To Know About the Bank of Canada Rate Cut


Posted by: Brad Lockey


1.  This is now the lowest prime rate we have seen since 2009.   There have been two prime rate reductions already this year.

2.  The banks don’t always respond and reduce their Bank Prime Rate.  They pocket the difference as a profit when they are borrowing money, so it’s common after a rate reduction for them to respond slower and in the most recent reduction they did not match the rate decrease in full.

3.  While rates have been at a historic low (or close to it) for the past several years, this does not generally impact your ability to qualify for a higher loan amount.   So far, there has been no change to the qualifying rate required to get a variable rate mortgage, which is more than double that of the rate you will actually receive. Variable rate qualification is based on a rate of 4.64%.  In terms of a payment reduction for existing mortgages, only expect an approx $4.00 per 100K. This provides an opportunity to optimize your mortgage by keeping your payment the same or increasing it.

4.  Fixed Rates are primarily based on the bond market and Variable Rates are tied to prime rate- whom you select as your mortgage consultant for life must have a plan for watching these indicators, while also putting together a long term mortgage strategy for you.

5.  If you have a Variable Rate Mortgage or Line of Credit, you don’t have to do anything to receive the rate reduction- the lenders will do it for you automatically once they have decided how they will choose to follow the BOC’s announcement.

Want to ensure you are getting the best rate AND mortgage for you and your family?
Contact me at 416-518-7476 or mortgages@bradlockey.ca so we can review ALL your options.

14 Jul

Renovation Financing – Purchase + Improvements


Posted by: Brad Lockey


So you have found a great house.  The neighborhood is wonderful.  Mature trees, lower property taxes, schools within walking distance and easy access to a variety of amenities.  But the house is, how do I put it, retro at best.  You wonder how you will tolerate the bright pink carpets and the vast array of energy inefficient items has you wondering if you will be able to pay the astronomical heating bills.

What now?  Should you look for something newer? No way my friend, there is a mortgage product made just for this situation and today we are going to take a look.

Purchase Plus Improvements is the name of this product and this is how it works. You head out with your Realtor to choose the best house for your needs.  You write up an offer and bargain your way to the best price.   In the meantime, you contact a qualified contractor or other service providers, to get quotes for the work you would like to do.  These quotes are provided to the lender as a part of the financing process.  The lender reviews and provides the thumbs up.

But you before to rush out to do just this, you really need to know a few things.

The day of possession, the funds are transferred for the purchase of the home so you are able to move in and start the renovations. The balance of the funds are held in trust with the lawyer and will not be released until the work is 100% complete. An appraiser will be sent to your home to verify the work is done. You may want to arrange access to a line of credit so you will be able pay for any deposits or other costs in the interim as you will only get the funds upon completion.
There is a maximum amount you are allowed. Most lenders will allow you $40,000 or 10% of the home’s value as your renovation budget.

You will have to have at least 5% of the improved value to put down.
For example, if your new home costs $300,000 and you are going to do $30,000 of improvements, you will need to have $16,500 down ($300,000+ $30,000 = $330,000 x 5% = $16,500) instead of $15,000.

Not all improvements you propose will be acceptable to the lender. The Travertine tile imported from Italy may be gorgeous but it does not necessarily add a dollar-for-dollar value.   Lenders like new kitchens, flooring, bathrooms, siding, windows, furnaces, garages, roofing or other substantial upgrades. They will sometimes allow appliances or landscaping but this is a case by case decision.

You must do the upgrades you said you would do to get the funds. It has happened that once a homeowner took possession of their home they opted to make different improvements, however the lender is not likely to release the funds for work they did not agree to in the first place.
There is a time restriction. Most lenders allow only 90 days for the work to be completed.  If some of the work is seasonal you should make sure your lender will allow a relaxation on the restriction.
This product can also be great for people purchasing a brand new home.  This is an easy way to get the funds you need to finish the basement or the fencing.

There is also a similar program for homeowners looking to upgrade their existing home.  In this case, the value of the home is determined via an appraisal “as is” and a complete system.   The current mortgage is paid out and the balance of the funds are held in trust with the lawyer until the work is complete.  The same restrictions as the Purchase plus Improvements apply.

The really nice part of this program is that you are able to borrow the funds to complete your renovations at today’s very low rates and your mortgage payment will be only slightly higher.

So there you have it.
A simple way to get the funds you need to turn your house into your dream home.
Your mortgage professional at Dominion Lending Centres can answer any questions you may have about this program.


7 Jul

Broker on Broker Competition


Posted by: Brad Lockey

Every seasoned mortgage broker has lost deals to other brokers. It’s just part of doing business.

But a few in our profession feel it’s over the line to court another broker’s clients with better rates. They deem it okay to undercut banks, credit unions and other lenders, but somehow it’s a tacit sin to undercut another broker.

When a prominent agent recently suggested otherwise, this was a fellow agent’s response to him: “F*%k you. Learn some ethics.”

Fortunately, the e-bully behind that vulgarity is unrepresentative of the vast majority of civilized client-centric mortgage professionals. Yet still we see some brokers falling into this trap, the trap of condemning competitors instead of improving their own game—as if that will actually effect the change they seek.

To be clear, most brokers—this author included—would rather win business from outside of the broker channel than from one of our own. But, in the words of my colleague Bob McDonald, brokers are competitors first and friends later. Not only is it acceptable for one broker to outprice another, it’s healthy (to a degree). It’s the market functioning as the market should.

“Buying down a rate has nothing to do with ethics,” notes McDonald. “What is unethical is advertising a bought down rate and using it as a bait and switch, not disclosing that this bought down rate is a 30-day quick close high-ratio special that has to fund in June but is only available if it’s snowing and your first and last name are both Laverne. That’s unethical.”

If, however, a broker operates in full disclosure and wins a deal by undercutting another broker, they didn’t “steal” that client. That client was never the first broker’s to begin with.

For someone to be your “client” (and not just a “lead”), three requirements must be met. The customer must understand your value, like you and trust you. If a competitor’s rate alone has won that client over, you’ve failed to meet one or more of these three requirements.

Fear of losing business drives us to serve clients better. In my early days—well before I had any online presence—I lost more deals to other brokers than I care to admit. The pain of that loss forced a re-examination of how I speak to clients and portray my value proposition. I owe those brokers for eating my lunch.

If you’re in our business, beware of counterparts who preach that broker-on-broker competition is somehow “unethical.” It’s anything but. In a normal transaction, we as brokers don’t have a fiduciary duty to each other. That duty is only to our clients and lenders.

Until competing brokers start paying your expenses, you owe it to their clients to work harder for the business, provide better informed advice and price more aggressively if appropriate. (And by no means is that an across-the-board endorsement of buydowns.) It’s what consumers expect and it’s what we’d expect standing in their shoes. McDonald said it best: “If you put your client second, you will come in second…and eventually last.”