Did you know? The Canadian government has recently introduced a First Home Savings Account (FHSA) . This account is specifically designed to help first-time homebuyers save for their down payment without having to pay taxes on the interest earned on their savings. This is something you would discuss further with your financial planner but here is some general information for you.

This means that the interest earned on the savings in the account is not taxed, nor are withdrawals from the account. Plus, since your contributions to this account are not taxed, your money will have the opportunity to grow faster in an FHSA than a traditional savings account.

This account is eligible for:

• Canadian residents who are at least 18 years of age.
• First-time homebuyers only – you and/or your spouse or common-law partner have not owned a home where you lived in the year in which you open the account or at any time in the previous four years.

With the First Home Savings Account (FHSA), you can:

• Contribute tax-free for up to 15 years.
• Contribute up to $8,000 annually, plus up to $8,000 of your unused contribution room*.
• Contribute a maximum lifetime limit of $40,000.
• Set up automatic contributions to help you stay on track.

*You can carry forward any unused FHSA contribution room from the prior years up to a maximum of $8,000 (subject to your lifetime contribution limit of $40,000). Therefore, if you contribute less than $8,000 in a given year, you can contribute the unused amount in a subsequent year in addition to the $8,000 annual contribution limit for that year. 

Another thing to consider is combining the First Home Savings Account (FHSA) with the Home Buyers’ Plan (HBP) to help you purchase a qualifying home. The Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 from your RRSP to buy a home. Keep in mind, you will need to repay the amount you draw for the Home Buyers’ Plan within 15 years back to your RRSP, PRPP or SPP.

If you are interested in setting up an FHSA or learning more, please don’t hesitate to reach out to me today! I have a great financial planner that would love to help discuss this further with you!

With the current interest rates and economic scenarios, many Canadians may be looking for ways to bring in some extra cash. One option for this is to put your home equity to work and consider renovating your basement into a legal income suite!

You can do this by using a secured credit line (home equity line of credit or HELOC) to help fund the upfront cash to make changes to your home.

A few things to consider before you invest in renovating to create an income suite include:

Zoning: Before looking into doing anything with an income suite, always double-check if you are zoned accordingly for a smooth renovation. If your zoning does not allow for secondary suites, see if you can rezone.

Local Regulations: Depending on your location, there may be particular regulations that you need to follow or be aware of regarding your suite.

A few examples of how the regulations can differ between provinces or cities include:

In Coquitlam, you cannot have a suite that is more than 40% of the main house floor plan. You are also required to offer a parking spot for tenants.
In Kelowna, you can only have one secondary suite and the home must have an “S” designation.
In Calgary, updated zoning legislation has now made it easier to add income suites.
Toronto has also proposed reforms that will make it easier to add suites.
In Montréal, anyone carrying out a project involving the addition of at least 1 dwelling and a residential area of ??more than 450 m² (equivalent to approximately 5 dwellings) must enter into an agreement with the City of Montréal in order to contribute to the supply of social, affordable and family housing. It can be a new building, an extension, or the conversion of a building.
Visit the official municipal websites or consult local building departments to obtain accurate and up-to-date information on the rules and requirements in your area BEFORE getting started.

Insurance & Legal Considerations: Before adding your secondary suite, ensure that you have proper insurance coverage or the ability to add additional coverage to protect both the primary residence and suite. In addition, you will want to consult a lawyer and draw up a tenant or rental agreement for any potential tenants. Ontario has a mandatory standard lease agreement that all landlords must use.

Unit Layout and Design: If the zoning and regulations in your area allow you to build an income suite, the next steps are to look at the suite layout and dimensions. Confirm any size restrictions or minimum ceiling height requirements as you are laying out the design for the unit.

The unit should have, at minimum the following:

A separate parking space for the renter.
A separate entrance, kitchen, bathroom, and living/sleeping areas.
Ventilation and soundproofing measures to enhance livability.
Consideration of natural light.
Interlink smoke detectors for primary and secondary residences.
Separate, independently-controlled ventilation and heating system.
Proper drainage, sewage connections, and utility separations.
Outlets, circuits, and lighting that meet electrical code requirements.
Ensure that however your income suite is designed, you are hiring the appropriate building, plumbing, and electrical experts to ensure your suite is up to code and avoid any potential disasters.

Building & Trade Permits: Once you have confirmed that you are properly zoned and able to add an income suite and understand all the regulations for your area, you will want to draft your blueprints and submit a permit application, along with the fee, before you get started. For instance, in B.C. you are required to have a Building Permit for any suite to be considered legal.

IMPORTANT: Even if you are not required to have a building permit, it is important to get these permits for other aspects including insurance coverage should anything happen. Having a building permit will help protect your investment.

In addition to your building permits, you will need to get permits for any plumbing, electrical, and gas renovations prior to beginning your work.

Inspections & License: Once you have your permits and have begun construction, make sure you understand what inspections are required throughout the process and you schedule them accordingly with local authorities to ensure compliance with building codes, fire safety standards, and health regulations.

If the work meets all requirements, your suite will be approved. The last step is determining if you need a business licence. This is not required if your family (parents, children, etc.) will be living in the suite. In Vancouver, for example, if you intend to rent out your suite long-term, you DO need a license. Be sure to check any rules on this in your area.

Beyond the ability to earn extra income per month, there are a few additional government incentive programs when it comes to suites including:

First Nations: If you live on a First Nations reserve, you may be eligible for federal funding that will provide up to $60,000 to help you build an inexpensive secondary suite rental linked to your principal home. If you live in a northern or remote area, this amount is increased 25%. This is a 100% forgivable loan that is not required to be paid back assuming all guidelines are followed.

Residential Rehabilitation Assistance Program (RRAP) – Secondary and Garden Suites: This program is open to all First Nations or individual First Nation members, particularly those who own a family home that can be converted to include a self-contained suite for a senior or adult with disability.

Multigenerational Home Renovation Tax Credit: A credit for a renovation that creates a secondary unit within the dwelling to be occupied by the qualifying individual or a qualifying relation. The value of the credit is 15% of the lesser of qualifying expenditures and $50,000.

British Columbia: Beginning in early 2024, BC homeowners will be able to access a forgivable loan of 50% of the cost of renovations, up to a maximum of $40,000 over five years, for income suites.

Ontario: There are multiple secondary suite programs throughout Ontario, depending on your region. These loans provide $25,000 to $50,000 in funding and are forgivable assuming continuous ownership for 15 years.
While it is important to look online and do your research. Your best resource will be visiting local authorities at the “City of” to confirm that you completely understand the considerations before moving forward with implementing an income suite.

When it comes to homeownership, many of us dream of the day we will be mortgage-free. While most mortgages operate on a 25-year amortization schedule, there are some ways you can pay off your mortgage quicker if that is a goal of yours.

1. Review Your Payment Schedule: Taking a look at your payment schedule can be an easy way to start paying down your mortgage faster, such as moving to an accelerated bi-weekly payment schedule. While this will lead to slightly higher monthly payments, the overall result is approximately one extra payment on your mortgage per calendar year. This can reduce the total amortization by multiple years, which is an effective way to whittle down your amortization faster.

2. Increase Your Mortgage Payments*: This is another fairly simple change you can execute today to start having more of an impact on your mortgage. Most lenders offer some sort of pre-payment privileges that allows you to increase your payment amount without penalty. This payment increase allowance can range from 10% to 20% payment increase from the original payment amount. If you earned a raise at work, or have come into some money, consider putting those funds right into your mortgage to help reduce your mortgage balance without you feeling like you are having to change your spending habits.

3. Make Extra Payments*: For those of you who have pre-payment privileges on your mortgage, this is a great option for paying it down faster. The extra payment option allows you to do an annual lump-sum payment of 15-20% of the original loan amount to help clear out some of your loan! Some mortgages will allow you to increase your payment by this pre-payment privilege percentage amount as well. This is another great way to utilize any extra money you may have earned, such as from a bonus at work or an inheritance.

4. Negotiate a Better Rate: Depending on whether you have a variable or a fixed mortgage, you may want to consider looking into getting a better rate to reduce your overall mortgage payments and money to interest. This is ideally done when your mortgage term is up for renewal and with rates starting to come back down, it could be a great opportunity to adjust your mortgage and save! This may be done with your existing lender OR moving to a new lender who is offering a lower rate (known as a switch and transfer).

5. Refinance to a Shorter Amortization Period: Lastly, consider the term of your mortgage. If you’re mortgage is coming up for renewal, this is a great time to look at refinancing to a shorter amortization period. This will lead to higher monthly payments, you will be paying less interest over the life of the loan. Knowing what you can afford and how quickly you want to be mortgage-free can help you determine the best new amortization schedule.

*These options are only available for some mortgage products. Check your mortgage package or reach out to me to ensure these options are available to you and avoid any potential penalties.

If you’re looking to pay your mortgage off quicker, don’t hesitate to reach out to me today! We can help review the above options and assist in choosing the most effective course of action for your situation.

Written by Mich Sneddon, CPA, CA – Reverse Mortgage Pros

Having completed many reverse mortgage files, there are some questions that I find I get often.
Here are 8 most common reverse mortgage questions that people in Canada have regarding reverse mortgages.

1. If I have an existing mortgage on the property, can I get a reverse mortgage?
Not only is this the most common question regarding reverse mortgages, it is actually one of the most common uses for a reverse mortgage – to pay off the current mortgage and eliminate that payment and help with monthly cash flow. However, it is important to realize that you would need to qualify for enough to pay that existing mortgage in full.

For example: If you have $70,000 remaining on the mortgage, you would need to qualify for at least $70,000 to be eligible for a reverse mortgage. If you owe $70,000 and qualify for $100,000 in reverse mortgage funds, the $70,000 would be paid first and you would be left with the remaining $30,000.

The good news is that the reverse mortgage funds can also be used to pay any penalties or charges for paying out your mortgage as well. However, the existing mortgage must always be paid off using the reverse mortgage funds and you get to keep whatever is left. Essentially, you are swapping your mortgage with a reverse mortgage and keeping the excess cash.

2. Can I pay the interest or make payments on the amount I receive?
Yes, you can make monthly interest payment if you choose and you can also pay up to 10% of the amount borrowed (1 payment per year) if you wish.

However, you also have the option to pay nothing at all until you sell the property or until you pass away. Most people choose this option but it is nice to know that you can pay the interest every month (essentially turn the reverse mortgage into the same thing as a Home Equity Line Of Credit).

3. How do you determine how much I qualify for? I thought I could get 55% of my home value?
This is a common question that we get. It is important to note that you can qualify for up to 55% of the value of the property and not everyone will get this amount. The words ‘up to’ are very important in this statement.

To determine how much you qualify for, four different factors are used: The ages of all applicants, the property value, the property location (postal code) and the property type.

Here is a quick example for all 4 factors: Someone aged 80 will qualify for more than someone aged 60; someone in a city will qualify for more than someone in the countryside; someone with a property value of $500,000 will qualify for more than someone whose value is $200,000 and someone who lives in a detached house will usually qualify for more than someone who lives in a Condo.

4. I’m 60 but my wife is 53, can we still qualify?
Unfortunately, no. Both applicants need to be 55 or over to qualify. Even if just one of you is on the title, because it is deemed a ‘matrimonial home’ (meaning that the husband and wife both have a legal right to the home, by nature of being married) both of you need to be 55 or over.

5. What is involved in the application?
Reverse mortgages aren’t as difficult a process to go through as a traditional mortgage. However, you aren’t going to simply be given the money either – remember you are still talking about large amounts of money here and the lender is a Schedule A bank.

Your credit score and income are not usually significant factors in the application – but the lender will still check these. In addition to this, proof of identity and other such paperwork is required.

An appraisal is always required and is the first step – so the lender can identify the market value of your home and therefore how much they can lend. However, it is possible to get a ‘quote’ before this.

6. What if I want to sell my home?
You can sell your house at any time if you have a reverse mortgage. The mortgage amount (plus any accrued interest and prepayment penalties, if any) would then be paid from the proceeds of the sale. The process would be exactly the same as if you had any other kind of mortgage or HELOC on the property.

7. Will I still own my home?
Yes, you will remain on the title for as long as you or your spouse live in the property and you can never be forced out of your home because of a reverse mortgage. In fact, from this point of view a reverse mortgage is ‘safer’ than a traditional mortgage. Under a traditional mortgage, you could lose your home for not paying your monthly mortgage payments. Since no such payments exist for a reverse mortgage, there is no such risk.

8. If I sell my house, can i re-apply for another reverse mortgage on my new property?
Absolutely! As long as the property is your primary residence – but just remember that you would need to qualify for enough to pay any mortgage on the new property. Reverse mortgages can be used for purchases in this way.

Please reach out if you have further questions Kensie Dooley 647-244-2422

While the mortgage process can be daunting, we have broken it down into 5 easy steps to help you get started! Plus, I am happy to help guide you every step of the way so it is even easier to make your dreams of home ownership happen.

Collection: When it comes to a mortgage application, you’re required to submit documentation for proof of: agreement of purchase and sale(or estimated mortgage amount if you are refinancing), proof of income/employment, down payment amount, identification and solicitor information and potentially more.

Options: I have access to multiple lenders with dozens of solutions to suit your mortgage needs. During our initial consultation, your mortgage professional will review your situation and provide an overview of mortgage options that are best suited to your needs.

Submission: I will then submit your mortgage application to the appropriate lender with the mortgage product that best suits your needs. As we work with dozens of lenders from banks to credit unions to trusts and private options, I can put my negotiating power to work for you to get you the best mortgage product.

Approval: Once you have been approved for your mortgage, you will be required to sign. From there, you will obtain approval documents including: payment details, mortgage terms and privileges, pre-funding conditions (if they apply). Should the closing date be more than 30 days away, your mortgage professional can also hold the approval documents and monitor the market. When you reach 4 weeks away from closing, they can help finalize the approval documentation.

Closing: This is the final step to homeownership where your signed documents are submitted to the lender with all supporting information. From there, the lender will review and approve the final documents and send their instruction package to your lawyer. When you meet with your lawyer, they will require final identification and signatures, and review your closing costs. It is on the closing day that the mortgage funds will be transferred to your lawyer to close the sale.

If you are looking to purchase your first home, or a new home, in the coming months, reach out to me for the advice and expertise to ensure you get the best mortgage product for YOU.

Get Pre-Approved

Having your mortgage pre-approved is an important step in the process and benefits you in three ways:

Pre-approval helps verify your budget and allows your real estate agent to find the best home in your price range.

Quick Tip: Don’t forget about the closing costs! These range from 1 to 4% of the purchase price and should be factored into your budget.

Pre-approval guarantees the rate offered and locks it in for up to 120 days. This protects you from any increases in interest rates while you are shopping (phew!). Make sure to ask exactly how long your pre-approval is good for!

Pre-approval lets the seller know that securing financing should not be an issue, which is beneficial in competitive markets!
Keep in mind, this is not the same as final mortgage financing approval, but it can be a very helpful step in the process towards getting your final approval by helping you work within your budget.

Using the free mortgage toolbox app can help you get pre-qualified as part of your pre-approval – right from your mobile phone! In addition, this incredible tool can help you calculate your closing costs and even your potential monthly mortgage payments.Free Mortgage App

Maintain Your Credit

If you are currently looking at homes or thinking about looking at homes, it is vital to maintain your credit throughout the entire mortgage process. Be sure to continue to pay your bills on time, refrain from applying for new credit, closing off credit accounts or committing to any other large purchases (i.e. new car), and also avoid pulling additional credit reports once you have been pre-approved. Another helpful tip is to keep any credit card balances below 70% of the limit to help skyrocket your score!

Utilize Your RRSPs

Did you know? The Home Buyer’s Plan allows you to utilize up to $35,000 from your RRSP and put it towards a down payment on a new home, which you can repay over a 15-year period. You must be a first-time home buyer to qualify.

Take Advantage of Government Programs

There are various government programs in place that provide some financial relief in the form of rebates and tax refunds, including:

First-Time Home Buyer (FTHB) Tax Credit: First-time home owners would get a credit of $1,500 if you qualify. Learn More.
First Time Home Buyer Incentive: The government will cover 5% of the purchase price on a resale home or up to 10% on a newly constructed home, if you qualify. Learn More.
GST/HST New Housing Rebate: You may qualify for a rebate for some of the GST or HST paid on the purchase price or cost of building your new house. Learn More.

There are also additional programs and support available depending on your province that are worth looking into, including land transfer and property transfer rebates, first-time homebuyer tax credits, homeownership support programs and more.

Contact Me for Expert Advice!

Before you get started on your home buying journey, make sure to reach out to me for expert advice on choosing the right mortgage options, determining your budget, getting your pre-approval, and more!

In a world with an abundance of options, it can be hard to know which way to turn to ensure that you make the best decision for your future. Fortunately, a mortgage agent can help! With access to numerous institutions including big banks, credit unions and trust companies, we are familiar with a vast array of available mortgage products.

From first-time homebuyer programs to financing for the self-employed or those with credit blemishes, we can help you find the best mortgage for – no matter where you’re at in life!

A Mortgage Agent Saves Time:
One of the biggest benefits to using a mortgage agent is that they are a one-stop-shop that not only saves you time, but can save you money too. Mortgage agents are experts in mortgages and are able to contact all lenders, from the big 5 banks to credit unions and even alternative options (if required). This means that YOU only need to fill out one application and your agent will do all the heavy lifting in order to present you with the best options for your budget so you can make the final decision!

A Mortgage Agent Can Often Find a Lower Rate:
When it comes to mortgages, not all lenders are created equal. Not only do different banks offer different rates depending on the mortgage conditions, but banks can only see their own rates. For you to be able to get accurate quotes, you would need to have multiple meetings – one with each bank or lender – to get their mortgage rate and terms. A mortgage broker has access to all of the different lenders and their connections can often result in a lower mortgage rate and better plan for you and your family.

A Mortgage Agent Offers Unbiased Advice:
Mortgage agents typically work with dozens of lenders and rely on client satisfaction and referrals to keep their business running. Unlike banks focused on signing you for profit reasons, a mortgage agent is a third-party service who gets paid no matter which bank they sign you with. This means they can provide the best rate AND unbiased advice because they are focused on helping you achieve your dream.

A Mortgage Broker Service is Typically No Cost:
In most cases, using the services of a mortgage agent comes at no cost to the homeowner or home buyer. A mortgage agent instead receives compensation directly from the lender. The only time you might have to pay is when working with a private lender or a lender that refuses to pay brokerage fees broker would tell you about in advance.

A Mortgage Agent Protects Your Credit Score :
With a mortgage, not only does it take a great deal of time to apply at dozens of lenders yourself, but it can also lead to a lower credit score. Each time you apply at a lender, they have to do a “hard credit check”. Unfortunately, too many credit checks in a short period of time can lower your credit score. The benefit of a mortgage broker is that they typically only need to pull your credit score once to apply to various lenders, which protects your hard work.

If you’ve received cash or if you have saved a large sum of money over the years, it may be tempting to pay off the mortgage loan early.
Paying off the mortgage early is an option, although it is important to look at your financial situation, the loan’s interest rate, and how close you are to retirement.

Although paying off a mortgage has benefits, I would recommend speaking to a reliable financial planner and consider other factors such as the tax-deductibility of mortgage interest and low loan rates.

Investing that money could potentially generate higher returns than the loan’s interest cost. Please keep in mind that investments also come with the risk of losses. Look at your options and see what is best for you!

It is possible that you could save thousands of dollars if you choose to invest rather than pay down your mortgage first. This could be lifechanging for you. Reach out to me today and we can discuss this further.

Great tools to see where your investments could take you if you are not in a rush to pay down your mortgage!

Mortgage Payment (simple interest) vs. Investments (compounding interest)

Compounding Interest Calculator