Tag Archive for: kevin decker

CMHC’s Eco Improvement Program

CMHC’s Eco Improvement Program

CMHC’s Eco Improvement Program provides financial incentives to encourage the construction or renovation of energy-efficient homes. The Eco Program plays a pivotal role in Canada’s efforts to meet climate goals. CMHC’s Eco Program has an updated and expanded list of energy efficient certifications. Building codes are progressing toward net-zero ready standards and CMHC’s Eco Program is a Step Toward Sustainable Housing.

The initiative also promotes eco-friendly building materials, solar energy installations, and smart technology. Which help to reduce a home’s overall environmental footprint.

This means you could be eligible for a 25% refund on CMHC Insurance Premium. For some perspective; on a purchase price of $850,000 (must be below $1,500,000), with a minimum down payment of $60,000 the CMHC insurance premium is $30,600. Clients who buy a qualifying property, are eligible for a refund of up to $7900. CMHC’s Eco Program a step toward Sustainable Housing.

CMHC’s Eco Improvement Program Climate Change: A Growing Responsibility

The real estate industry is becoming increasingly aware of its environmental impact. New construction methods, energy-efficient home designs, and a greater focus on sustainability are all part of the movement to address climate change. Here are some key facts:

The Building Environment is a Major Contributor to Carbon Emissions: According to the World Green Building Council, buildings account for 39% of global carbon emissions, with energy use being the largest contributing factor.

Energy-Efficient Homes are More Attractive to Buyers: As consumers become more environmentally conscious, homes with sustainable features—such as solar panels, high-efficiency heating systems, and well-insulated walls—are growing in demand. Energy-efficient homes can sell for up to 7% more than their less-efficient counterparts, according NAR (National Association of Realtors).

Government Incentives are Growing: Programs like CMHC’s Eco Program are just one example of how governments are encouraging the real estate industry to reduce its carbon footprint. Financial incentives, rebates, and grants are available to homeowners and builders to promote energy efficiency and sustainable development.

To be Eligible:

A homeowner with CMHC Insured financing
Allocate a minimum $20,000 for energy-efficient improvements that fall within any of these 3 categories
Building Envelope (insulation, windows, doors, roof, attic, air tightness & foundation).
Mechanical systems (HVAC- Heating, Ventilation and Air Conditioning, heat pump systems).
Renewable energy systems (solar, wind, geothermal).
CMHC has made the program user friendly and beneficial for the homeowner, putting money back in their pocket is always a positive.

How do I get my Refund?:

Up to two years after the mortgage close date to submit the rebate request along with supporting documentation directly through CMHC’s website through their Eco Program and submit the application with supporting documentation. The funds can be used for any purpose, they do not have to be applied to the mortgage. The documents are good for up to five years. If the house sells the new buyer can also apply for the CMHC refund. See link to the application below.

https://www.cmhc-schl.gc.ca/en/professionals/project-funding-and-mortgage-financing/funding-programs/all-funding-programs/canada-greener-homes

Conclusion:

It’s clear that sustainability is becoming an increasingly important factor in the real estate industry. Thanks to programs like CMHC’s Eco Program, homeowners can take meaningful steps toward reducing their carbon footprint, lowering their energy costs, and contributing to the fight against climate change. The future of housing is green, and with the right incentives and awareness, the industry can lead the way in creating a more sustainable world.

Industries are looking for innovative ways to reduce their carbon footprints—and Real Estate is no exception. When it comes to homeownership, people face the choice between buying a new home or an existing one. Both options come with their own benefits. One key element shaping the future of both new and existing homes is Canada’s commitment to fighting climate change, particularly through initiatives like the CMHC’s Eco Program.

Have questions? Contact Kevin Decker, Jason Barudin, Blaire Bourcier or Tyler Moretti at Mid Island Mortgage & Savings LTD. 250-753-2242

Locally owned and operated since 1985.
“The name friends recommend”

Blog Posts
Insured Mortgage Changes

BC Tenancy and First Time Buyers

Zoning Changes: City of Nanaimo Bill 44 Response

Maximizing Income vrs Using Business Write Offs

Mortgage News
BOC Cut = lower interest costs

CMLS Aveo 40 Year Mortgage

Bank of Canada Forecasts

What Rate Cuts Mean to Borrowers

 

First-Time Home Buyers 30-Year Insured Mortgage

Unlocking Homeownership: Canada’s New First-Time Home Buyers 30-Year Insured Mortgage 

As home prices continue to rise, it can feel nearly impossible for first-time buyers to break into the market. The 30-year insured mortgage is a game-changer for young Families, and first time buyers trying to purchase their first home, especially in cities where prices have skyrocketed. By reducing monthly payments, it can ease the financial strain and help buyers afford homes they might have once thought out of reach.

Mortgage payments are stretched over a longer period (30 years instead of the typical 25 years). This makes monthly payments more affordable by reducing the amount you have to pay each month. For many, this could significantly ease the financial pressure of homeownership.

However, as with any financial commitment, it’s important for potential homeowners to understand the trade-offs, particularly when it comes to paying more interest over time. For those who can manage the long-term plan, it offers a much-needed pathway to homeownership in today’s competitive market.

Insured Mortgage: Canadian Mortgage and Housing Corporation (CMHC), Sagen or Canada Guaranty offer mortgage insurance. This provides protection for the lender in case of default on the mortgage, which means they offer their best mortgage interest rates. The downside for the buyer? You’ll pay a slightly higher mortgage insurance premium than you would on a 25 year mortgage (.20% above a 25 year amortization mortgage) which is calculated on the mortgage amount, and is included in your total mortgage amount. A few extra costs, but the overall impact on affordability can be worth it.

Eligibility Criteria?

To take advantage of this program, you’ll need to meet a few basic criteria:

  • First-time buyer: You have never owned a home or haven’t owned a home in the past four years. Nor have you occupied a home as a principal place of residence you or your Spouse have owned in the last four years. You may qualify if you did own but recently experienced a breakdown of marriage/common-law partnership.
  • Stable income: You need to prove that your household income is sufficient to manage the new mortgage, credit needs to be strong with timely repayment of debts, and the lower the debt load the better.
  • Property cap: $1,500,000 maximum Purchase price

Benefits

  • The Unique Benefit of the extended amortization is that only one borrower on the mortgage needs to be a first-time buyer to qualify. That means a parent can be cosigning for first time buyer child (or vice versa).

  • Lower Monthly Payments: Stretching out your mortgage means you won’t have to pay as much every month. This could free up extra money for other priorities like childcare, education, or savings.

  • More Home for Your Money: With lower monthly payments, many first-time buyers can afford a larger or more desirable property than they could with a traditional mortgage term.

  • Stability and Peace of Mind: A 30-year term can provide longer-term financial stability. With a more affordable monthly payment, families may have a better chance of weathering financial challenges in the future.

Potential Drawbacks

  • Higher Total Interest: While monthly payments are lower, you’ll pay more interest over the life of the loan because repayment is extended over 30 years. For those who are able, paying off the mortgage faster can reduce the total interest paid.

  • Mortgage Insurance Premiums: To protect lenders, CMHC (or Sagen or Canada Guaranty) require that a mortgage insurance premium be paid by the buyer. While this helps the affordability of monthly payments, it adds to the overall cost.

  • Qualification Hurdles: While the program is designed to help, qualifying may still be challenging for some families due to strict qualification requirements and regional property caps.

What Does This Mean for Young Canadian Families?

What difference will the 30- year amortization make to the bottom line–payments, and buying power for those trying to get into the housing market? Let’s look at a couple of options, and consider households that don’t have any debt, and have some savings put away for their home purchase.

Example: buying a condo with a purchase price of $549,000

25-year amortization: Down payment $29,900 Default Insurance Premium: $20,764 Payment: $2896/month Estimated household income required: $125,000/yr

30-year amortization Down payment $29,900 Default Insurance Premium: $21,803 Payment: $2693/month, Estimated household income required $117,400/yr

Consider combined household income amount of $100,000/year:

Another way to look at things would be from qualification standpoint. Let’s assume a household income of $100,000. With the old rules of a maximum amortization of 25 years for insured mortgages, these first-time buyers could qualify for a maximum purchase price of approximately $430,000. With a 30-year amortization these first-time buyers can qualify for $453,000 purchase price. (Scenario considers condo purchase with taxes and strata fees estimated for illustration purposes).

Do you want to see what these changes can mean for you?

Give your Broker a call and we can answer any questions you may have.

 

Maximizing Income vs. Using Business Write-Offs: A Balancing Act for Self-Employed Mortgage Qualification

Maximizing Income vs. Using Business Write-Offs: A Balancing Act When Qualifying for a Mortgage

If you’re self-employed and planning to buy a home, refinance, or transfer your mortgage, balancing income and tax write-offs is crucial when tax season arrives. Your financial profile plays a significant role in mortgage qualification, and understanding how lenders assess self-employed income can make a big difference in determining how much you can borrow. In this article, we’ll explore how lenders evaluate self-employed income and how your net business income impacts your mortgage eligibility.

The Importance of Income When Qualifying for a Mortgage

Higher Income Equals a Larger Loan Amount

Lenders base their mortgage approval decisions largely on income. Simply put, the more you earn, the more you can borrow. A higher reported income increases your borrowing power and enhances your chances of getting approved for the loan amount you need.

A key factor in mortgage qualification is your Gross Debt Service Ratio (GDSR)—the percentage of your income that goes toward housing costs. Lenders typically require this ratio to be no more than 39% of your income. A lower GDSR indicates financial stability and makes you a more attractive borrower. For example, if you earn $100,000 per year compared to $50,000, you’re likely to qualify for a larger mortgage and a more expensive home.

Another important metric is your Total Debt Service Ratio (TDSR), which accounts for all your debt obligations, including housing costs, credit cards, and loans. Traditional lenders usually set a maximum TDSR of 44%. A higher debt load can reduce your borrowing capacity and make mortgage approval more challenging.

The Flip Side: Write-Offs and Mortgage Qualification

While maximizing income can help you qualify for a larger mortgage, using business tax write-offs—while beneficial for reducing tax liability—can have unintended consequences. Lenders assess net business income (after deductions), and excessive write-offs can lower your reported income, potentially impacting mortgage approval.

Business Write-Offs Lower Your Net Taxable Income

For business owners, freelancers, and self-employed individuals, tax write-offs are a great tool for minimizing taxes. However, deductions such as marketing, advertising, and other business expenses reduce net business income, which is the figure lenders use to assess mortgage eligibility.

For instance, if you earn $100,000 but claim $30,000 in write-offs, your net income is $70,000. Since lenders typically average two years of self-employed income, excessive deductions can lower your mortgage qualification amount.

Striking a Balance: Maximizing Income Without Sacrificing Write-Offs

So, how do you balance reducing taxes with qualifying for a mortgage? Here are some strategies:

1. Plan Ahead for Mortgage Qualification

If you plan to buy a home in the next two years, consult with a financial advisor, accountant, and mortgage broker now. A mortgage expert can help you understand how lenders assess your income, while your accountant can develop strategies to optimize your reported income for mortgage qualification. In some cases, paying higher taxes in the short term may improve your borrowing ability.

2. Work with Professionals

Tax planning is essential for self-employed individuals. Your accountant can advise on structuring expenses and income to balance tax savings with mortgage eligibility. Financial planners can assist with home savings strategies and guide you on investment withdrawals when preparing to buy. Need suggestions on who to work with, visit our resource page.

 

Conclusion

Maximizing your income is a proven way to boost mortgage qualification. However, if you rely heavily on business write-offs to reduce taxable income, you may face challenges securing the loan amount you need. Finding the right balance between tax efficiency and mortgage approval is key. By planning ahead and working with financial professionals, you can navigate these challenges and confidently prepare for homeownership.

Have questions? Contact Us—we’re here to help! Or click here to Apply Now.

 

Updates: BC Tenancy Act & 30 Year Amortizations First Time Buyers

BC Tenancy Act Changes & 30-Year Amortizations for First-Time Buyers

Recent government policy changes have significantly impacted the real estate and mortgage landscape in British Columbia. These changes, which took effect in July and August 2024, are crucial for landlords, tenants, and home buyers to understand. The amendments to the BC Tenancy Act and the new rules for First-Time Home Buyer amortizations are particularly noteworthy. Read on to learn more about these two significant updates.

BC Tenancy Act Key Changes

Effective July 18, 2024, several important changes to the BC Tenancy Act have been implemented. Here’s what you need to know:

  1. RTB Landlords WebPortal: Landlords must now register all notices to end a tenancy on an online portal and include the reason for termination.
  2. 120-Day Notice to Tenants: The notice period for tenants to vacate a property for owner occupation has increased from 2 months to 4 months.
    • Notice starts on the first day of the rental period.
    • Example: If notice is given on July 22, tenants must vacate by December 1.
  3. Increased Compensation: Tenants will receive 2 months’ free rent, up from the previous 1 month. Additionally, if the property is not used as stated for 12 months after the tenancy ends, the landlord or buyer owes the tenant 12 months’ rent.
  4. Increased Time to Dispute: Tenants now have 30 days to dispute a notice, up from the previous 2 weeks.

Considerations for Buyers:

  • Mortgage Interest Rate Holds: Rate holds currently last 90-120 days. When buying a tenanted property, work with your mortgage broker or lender to ensure your approval will hold until completion.
  • Owner-Occupied Purchase: When buying a tenanted property that will be your principal residence, be aware that the 120-day notice will postpone your move-in date.
  • Investor Impact: Selling tenanted properties will now involve additional considerations for landlords.

For more information, visit the Tenancy Act Changes.

If you’re looking to purchase a tenanted home, consult your REALTOR® and mortgage broker.

First-Time Home Buyers: 30-Year Amortization

Starting August 1, 2024, first-time homebuyers purchasing newly constructed homes priced under $1 million can benefit from 30-year amortizations. This change applies to insured mortgages, with a minimum down payment requirement of 5% on the first $500,000 and 10% on the balance. This update aims to increase buying power for eligible purchasers.

Eligibility Criteria:

To be considered a first-time homebuyer, at least one borrower on the application must meet one of the following criteria:

  • The borrower has never purchased a home before.
  • In the last 4 years, the borrower has not occupied a home as a principal residence that they or their current spouse/common-law partner owned.
  • The borrower recently experienced the breakdown of a marriage or common-law partnership.

First-time homebuyers should connect with their mortgage professional to update their application and determine how the increased amortization impacts their pre-qualification.

For more details, visit the CRA 30-Year Mortgage for First-Time Home Buyers.

Stay Updated

As mortgage regulations continue to evolve, we remain committed to keeping you informed with the latest information. For personalized advice and to discuss your specific situation, call us today at 250-753-2242.

Zoning Changes: City of Nanaimo Responds to Bill 44

Bill 44 – zoning changes

The Provincial Budget announced in April includes Bill 44-Small Scale Multi Unit Housing (SSMUH) initiative.  Municipalities in BC had to take action and announce their zoning bylaw changes by June 30, 2024.

On June 18, 2024 the City of Nanaimo’s response was announced.

What is Zoning?

Zoning refers to designations that are set out by a city or regional district that outline what is and isn’t allowed, including conditions for development and land use.  Previously, the bulk of Nanaimo’s residential zoning was R1 – this allowed for one single residential dwelling, or for two principal dwellings on certain corner lots.  R1 zoning has been changed to R5 for the most part; R5 allows for development of small scale multi family residential dwellings of up to 3-4 units.  Many homeowners can now add a secondary suite, and a carriage house.

Click here to check out this City of Nanaimo Zoning Map. 

Other Changes

Among the changes to zoning types, Nanaimo now recognizes suites in duplexes, row houses and townhouses.  Lot size restrictions for secondary suites are removed, and R5 zoning have decreased front yard setbacks.  Units zoned R14 Old City Low Density, allow for fourplexes, and have special density provisions if the integrity of existing homes are being retained.  For specific details and questions please contact the City of Nanaimo.

The Province’s action of SSMUH addresses the ongoing housing shortage being faced by British Columbians. With multiple programs available, homeowners should ensure they are aware of the tools and resources at their disposal.  The Secondary Suite Incentive is available for those who are building a suite in their principal residence.  This is a $40,000 forgivable loan that assists homeowners with the cost of renovations. The rental suite must be rented at below market rents for 5 years.  To find out what ‘below market rents’ means in your area, please click Here. 

Our May Blog Post has the basics on the Secondary Suite Initiative. 

For further details of the Suite Assistance Initiative, visit BC Housing Assistance – Suite Initiative.

Our team is here to answer any questions you have. We will help determine the options for turning equity into cashflow. Call us 250-753-2242.

 

https://www.ctvnews.ca/politics/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.6842913

2024 Federal Budget Announcements and Thirty Year Amortization Period

Finance Minister Chrystia Freeland announced April 11, 2024 that the federal government will allow a thirty year amortization period on insured mortgages for first-time homebuyers purchasing newly built homes. Some say expanding the policy to all Canadians would help make home ownership more affordable. The change takes effect Aug. 1, 2024.

Under the current rules, with a down payment less than 20 per cent of the home price, the longest allowable amortization is 25 years. Extending amortization, to a thirty year amortization makes monthly mortgage more affordable for young Canadians who want to buy their first home.

This will allow more opportunities for home ownership and will ultimately contribute to economic revival and economic recovery. Enabling some Canadians to stop renting and become homeowners.

First Time Home Buyers Withdrawal Plan – RRSP

Freeland also announced the government will raise the amount first-time homebuyers can withdraw from their RRSPs to $60,000 from $35,000 to buy a home. That will take effect April 16, 2024 the day the federal budget is set to be released. The size of a down payment and the amount of time needed to save up for one are much larger than they used to be. Withdrawals will also have an extended timeframe for repayment.

People who have made or will make withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment — up to five years rather than two. 

Ottawa said the changes are meant to work in tandem with the First Home Savings Account, which it launched last year. The rules governing that program allow prospective homebuyers to start saving for up to 15 years once they open an account, with an annual $8,000 (tax deductible) deposit cap and a lifetime contribution limit of $40,000. Unlike the RRSP First Time Home Buyers Withdrawal Plan, qualified withdrawals do not require repayment and are non-taxable.

Freeland said more than 750,000 Canadians have opened an FHSA to date. While the program came online April 1 of last year, most Canadian financial institutions only began offering the account as of last summer or fall.

Ottawa also announced changes to the Canadian Mortgage Charter that will include an expectation that financial institutions offer permanent amortization relief to protect existing homeowners who meet certain eligibility criteria.

That would allow eligible homeowners to reduce their monthly mortgage payment to a number they can afford for as long as needed.

 

https://www.ctvnews.ca/politics/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.6842913

 

https://www.cbc.ca/player/play/1.7171449

Did someone say “Second Home” ?

 

University will start in the Fall. For some of our kids that means seeking accommodation options.  Perhaps your looking to buy a second home to reside in for commuting purposes, or want to buy a vacation property to enjoy.  Others might want to purchase a property to move a family member closer.  Canadians are allowed to purchase a second home with minimum down payment as long as the use of the home meets certain requirements.   

 

The kids may have graduated high school, but that doesn’t always mean providing for them is done.  High rent amounts and cost of living make it challenging for young adults to get ahead.  Even with full time jobs.  Challenging stressful times await these young adults, going to school, having limited time to work to pay bills, living on their own for the first time and studying to achieve their education goals to secure their future employment. Having housing in place is a monumental difference maker and a stress relief, allowing them to concentrate on schooling.  The second home program can help.

 

The caveat to this program is that the home must be occupied by an immediate family member. Buying property for a child in University is a great example. Helping a child with housing in that way not only gives them shelter, but provides them the life lesson of homeownership.  They will learn how real estate can produce wealth, and how getting your money to work for you can be a life changer. Help your kids save on rent, while you invest in Real Estate and their future.   University is a massive expense–maybe the real estate you purchase increases in value while they are in school, offsetting the cost of their education.  The return will be worth it! 

 

The fast ferry is making its maiden voyage in Nanaimo.  With Vancouverites being able to commute to Nanaimo with a short sail across the ocean, housing in Nanaimo will be that much more desirable. More people who already commute that “hour plus” drive in Vancouver to their job can look at purchasing a property in Nanaimo. They could buy a home in Nanaimo as a second property.  Mortgages are possible!

 

Summer weather comes with heat, and the desire to be by the water. While travelling around during the summer months you might find that special spot you and the family fall in love with. You can look at purchasing a property in that area, creating family memories for generations. That summer cabin can be bought with minimum down, and you can start making your own family memories this year.  

Do you have that family member living far away who has a desire to live closer to you? Help them relocate by purchasing a property with the minimum downpayment: get the family together again. 

With as little as 5% down on the first $500,000 and 10% on the balance, a mortgage for a second home can be achieved.  Applicants are required to qualify for the mortgage without rental income on the new property.  The property has to be for your own, or a close family member’s, use.  This is not the program for a rental purchase.  

 

For clients in any of these categories, Kevin, Jason and Blaire would be happy to explore options.  Call 250-753-2242 or apply now or email: 

 

info@midislandmortgage.com

kevin@midislandmortgage.com

jason@midislandmortgage.com

blaire@midislandmortgage.com 

“The wise young man or wage earner of today invests his money in real estate.” -Andrew Carnegie

Death. There, I Said it.

Death. There, I said it.

 

Losing a loved one is one of the most difficult things a person can face. Being left to navigate the estate process can be daunting.  However, with prudent planning, the people left behind can grieve their loss and support the wishes of their loved one.  Make a plan for those you’ll leave behind–it will give you and your loved ones peace of mind.

It’s never too early (or late) to plan for the unexpected.  Read our tips for simplifying the lives of your loved ones upon your passing.  

 

Update Beneficiaries

 

Beneficiaries can be selected on registered investment plans including: Registered Retirement Savings Plans (RRSP), Tax Free Savings Accounts (TFSA), Registered Retirement Income Funds (RRIF).   Review your investment plans with your financial advisor to ensure the beneficiary is still relevant. Your life insurance policy is an important part of estate planning.  Review your life insurance beneficiary with your life insurance provider to ensure it is up to date.  Undergoing a major life event should be a que to review your beneficiaries.

 

Meet with a Professional

 

Enlist the help of an estate planning professional.  Financial Planners, Lawyers or Notaries are all professionals who can assist in this process.  They can help you consider your estate plan from all angles to best protect and provide for your beneficiaries. When you are making your plan, be clear and direct with your wishes to your estate planner.

Never assume that one partner will “go first”.  Never assume that your partner, or children know your wishes.  Making assumptions adds pressure to your family after your passing, and can create tensions amongst remaining family members. 

 

Confirm Title of your Home

 

If you own property, it’s especially important to fully understand the differences in ownership options.  Real Estate is often a cornerstone of an estate, call your lawyer to go over the ownership options in full detail; know the differences and decide on the best fit.  There are two ways that co-owners can be registered on title, each has different implications for the surviving owner.  

 

Joint Tenants: When one owner passes away, the survivor automatically gets the deceased’s portion.  

 

Tenants in Common: the interest of a deceased owner gets transferred to its beneficiaries in accordance with that person’s will. 

All too often the conversation regarding finances and death are avoided, and there’s no wonder why.  If you’re married or in a common-law relationship, you and your spouse need to have the “what if” conversation.  As a parent, determine how your children will be taken care of after you pass.  If you have adult children who will handle your estate, make sure they have an understanding of your financial situation. 

Indicate the following: where your bank accounts are held, what your financial assets are, the details of your mortgage, if you own your home free & clear, what the ownership structure of your property is.  If you are deferring your property taxes or not, and tell them where your will is located.  The more your loved ones know about how you want your estate to be disbursed the easier it will be for the surviving family members. 

 

None of these tips are staggering, but the value of understanding the information truly is!  The Rule of 7 says it takes hearing something 7 times for it to really hit home. By taking the time to read this article, you can add another ‘check mark’ toward creating an estate plan. For more estate planning information check out the links below.   If you’re not sure where to start, call us 250-753-2242 or click here to apply online:  Mortgage Application

 

https://islandlaw.ca/will-considerations 

https://www.ig.ca/en/estate-planning 

https://coastalwealth.ca/leave-a-legacy/ 

https://crossandco.ca/services/tax-services/trusts-estates/

 

 photo credit:https://www.karphotography.net

Mortgage Options for Self Employed

Self Employed : Mortgages

Woman working hard at her business

Business Owner? There are options for mortgage financing.

Being self employed has many advantages, like setting your own schedule and being your own boss.  You also have the advantage to write off items to decrease your taxable income.  This is great when it comes time to pay the Government, but can create challenges when you are planning on borrowing.  There is a major advantage to working with a broker who is well versed in Business for Self (BFS) programs available.

The Gold Standard for Self Employed

The most universal method to calculating self employed individuals income is by taking a 2 year average.  To achieve ideal interest rates, a 2-year average of your NET income is used.  That means your gross income is not the amount being used to calculate your capacity for a mortgage.  All write-offs and deductions are used to calculate your Net Income.  If your Net income has been declining, the lower amount is used for qualification purposes.  In an ideal world, real estate transactions would be planned a few years in advance–allowing for pre-planning with your accountant.

Traditional Lending – New to BFS

There are programs available through traditional lenders for clients who have less than 2 years self employed.  The requirements include having to have worked in the same industry as before they became self employed.  The client needs to be able to show that they have a history in the industry to qualify for this program.

Subprime Lenders

Subprime lenders offer solutions to a variety of self employed individuals.  Clients could be new to their industry, or well established but their past years net income isn’t an accurate reflection of current income.  Regardless, there are Subprime lenders who might be able to help.  Subprime lenders will complete a review of your business bank statements for the past 6-12 months. Lenders review deposits and deduct expenses to arrive at an income amount that will be used for qualification.  Having flexibility in income qualification does come with additional costs.  Interest rates are generally 1-2% higher than a traditional lender, plus there is a lender fee.

Why use a Mortgage Broker

Mortgage Brokers have access to a variety of programs and options for self-employed individuals.  If you’re working with clients who are BFS it’s important they know what’s available.  Brokers have access to multiple programs and lenders, and can ensure that client’s buying power is at it’s full potential.  This gives the client an advantage; providing them with multiple possible solutions.

For more information please call Kevin, Jason or Blaire today 250-753-2242

Fill out our Online Mortgage Application

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Mid-Island Mortgage & Savings Ltd. & the Christmas Angels…

Why Budget?

Everyone knows, the cost of living has increased.  Going to the grocery store, the gas pump, or a trip or to the movies all costs more. While there isn’t much that can be done about that in the short term, what is in everyone’s control?  Budgeting.  Work with what you have to help make your finances align with your goals.  You do not have to break the bank this Christmas.  Read through some of our budget tips on how to live within your means. 

Why is it important to set a budget? Spending can get out of control to the point where you may not even know where your money is going.  You may not have any savings plan in place.  Do you want to start saving for a down payment on a house, or to complete some renovations?  Maybe you’re noticing your credit card bills getting out of hand.  The Christmas season puts added pressure on bank accounts, but it doesn’t have to.  Now is the time to pay more attention to your bank account and spending habits.

By creating a budget you can save money, pay down debts, reduce your stress, have more control and have money to do the things that are truly important to you.  Who doesn’t want to live within their means?  

Budget Tips:

Create a Budget

The sooner you create a budget the sooner you can start improving your finances.  Look at your net monthly income, account for expenses are mandatory, and identify any leaks where money seems to be slipping away.  

Free Monthly Budget Tool 

Christmas spending limit

Do not go overboard with gift buying this year.  Get together with family to change how you do things, have a draw for family or friends so you only have to buy for one person.  Rather than an expensive gift exchange, make homemade gifts or do a whacky $10 gift exchange.  Don’t give into pressures of the season, it’s more important to be true to your values than to get the biggest best gift.  Remember what’s truly important to you when it comes to the holidays and focus on that.

Multiple Accounts

Have multiple bank accounts-ensuring that you have a designated spending account will act as your allowance for any discretionary items.  Allocating another account where payments come out on a regular basis means you can set it and forget it. Once you’ve determined how much is going out of that account each month, you know how much to put in and subsequently you can alleviate stress.  It goes without saying, one of these accounts needs to be for Christmas if you intend to spend money around the holidays.

Automatic Transfers

Set an amount that will transfer to your savings each payday.  This can be as low as $25 to get you started and in the habit of saving.  If you have a goal you are saving towards, work backwards. Figure out when you need the money, divide it by how many pay cheques you have until then, and set up your transfer for that amount.  Then when that trip to Mexico comes up, or your hot water tank goes, you’ll have the funds on hand. This will once again reduce stress. 

Emergency Savings

It’s said to have at least 3-6 months worth of expenses in a savings account. For those who aren’t already savers by nature, that can be a daunting number.  Especially when the cost of living has risen so significantly, and ‘extra’ money may seem like a pipe dream.  Start by saving $500 to $1000 as quickly as you can. This can sit in a savings account that is accessible, and can assist in a true emergency should it arise. This could help reduce anxiety if something comes up, and mean you won’t have to rely on credit as heavily.

Allowance 

Give yourself an allowance-really!  Once you have all your monthly expenses set, you know what you’ll be able to put into savings. Provide yourself an amount that can be used for your discretionary spending, could be going to the movies, dinner’s out, or grabbing a fancy coffee.  Don’t make your budget so strict that there isn’t any fun.

Getting Help

Creating a budget is a really great starting point– but getting the help of a professional is a good idea.  A mortgage professional can review your mortgage and other expenses to see if they can help you save money.  Don’t have a mortgage? They can also help get you on the path to home ownership by helping to determine what steps you need to take.    

 

Free Monthly Budget Tool

https://docs.google.com/spreadsheets/d/1l2NNg1PHKJwUROjhObANsiML09u8ZUUpDBHWA8FpK3c/edit#gid=0