Renewing your mortgage is an important decision that can significantly impact your financial future. While it may seem like a straightforward process, there are many factors to consider when applying for a renewal mortgage. This guide will explore the key things you need to keep in mind to ensure you make an informed decision.

Factors to Consider When Applying for Renewal Mortgages:

• Interest Rates: One of the most important factors to consider when renewing your mortgage is the interest rate. It’s essential to compare the rates offered by different lenders to find the best deal. While a lower interest rate may seem like the obvious choice, it’s important to consider other factors such as payment frequency and penalties for breaking the mortgage.
• Mortgage Term: The term of your mortgage is another critical factor to consider when renewing. The term is the length of time you are committed to a particular lender and interest rate. It’s important to choose a term that works for your financial situation, goals, and risk tolerance.
• Mortgage Type: When renewing your mortgage, you can choose between a fixed or variable rate mortgage. A fixed-rate mortgage offers stable payments for a set term, while a variable rate mortgage fluctuates with the market. It’s essential to weigh the pros and cons of each option and choose the one that best suits your needs.
• Prepayment Privileges: Prepayment privileges allow you to make extra payments or pay off your mortgage early without incurring penalties. It’s crucial to consider these privileges when renewing your mortgage, as they can save you money in the long run.
• Mortgage Broker: Working with a trusted mortgage broker can make the renewal process much smoother. A mortgage broker can help you navigate the complexities of mortgage renewals and find the best deals. When looking for a Regina mortgage broker, be sure to choose one with experience, knowledge, and a proven track record of success.

Renewing your mortgage can be a daunting task, but with careful consideration and the help of an experienced mortgage broker, you can make an informed decision that will benefit you in the long run. By keeping the above factors in mind, you can find the best renewal mortgage for your needs and secure your financial future.

Sources:

1. Interest Rates – Canada Mortgage and Housing Corporation
2. Mortgage Terms – Financial Consumer Agency of Canada
3. Fixed vs. Variable Rate Mortgages – Investopedia
4. Prepayment Privileges – Financial Consumer Agency of Canada
5. Choosing a Mortgage Broker – Financial Consumer Agency of Canada

 In today’s hot housing market, where inventory is low, demand is high and mortgage rates are at record lows, securing a mortgage preapproval has never been more important.

Obtaining a preapproval is highly recommended before you even begin house hunting so you understand what you can comfortably afford to spend on a property. During this process, your lender will undertake a thorough assessment of your finances and creditworthiness to determine whether you meet the requirements to secure financing. If you’re preapproved, you’ll receive documentation verifying that you have the financial means to make an Offer to Purchase.

This is a conditional commitment from your lender to grant you the mortgage you seek but in no uncertain terms does it represent a final mortgage approval. While the conditions of a preapproval will typically be valid for 90-120 days, it’s important during this period not to make any significant changes to your current situation. When it’s time to draw up the Offer to Purchase, your lender will want to verify that you still meet the qualification criteria as well as assess the property’s value and suitability. If there are changes that could possibly derail the process, you could be denied a mortgage despite having been preapproved.

Maintain a healthy credit score

Your credit score is one of the most important factors in obtaining a mortgage approval so avoid situations that could alter it negatively. If your credit rating drops, your risk level increases in the eyes of your lender, which means you may no longer qualify at the amount for which you were preapproved. It’s important to demonstrate a consistent pattern of paying your bills on time and managing your debt responsibly. Exercising wise financial decisions will ensure your credit remains in good standing.

Keep debt levels low

Rising debt is a significant red flag for lenders and will adversely affect your debt-to-income ratio (DTI), a key determinant in the mortgage financing qualification process. A high DTI implies instability and potential issues with loan repayment so you want to keep it low. Avoid taking on new debt, even a small amount, such as a line of credit, personal loan or additional credit card, and be sure not to accrue a higher balance on your existing cards or lease/finance a vehicle. An increase to your debt level, no matter how insignificant, will almost certainly jeopardize your chances of approval.

Ensure consistent employment and income

If possible, avoid making any changes to your employment status once you’ve been preapproved. Most lenders will require you to have at least two years of consistent income and stable employment so, if you can, hold off on any career decisions until after the deal closes. There are some exceptions where a similar career with similar income will likely not pose a problem to your application, but a brand new field with less stable income will not bode well. Also, if you lose your job or your wages are reduced, it may be wise to reconsider buying a home until steady employment resumes.

Have questions about mortgage preapproval or final approval? Answers are a call or email away.

Email: kent@bittnermortgages.com

Schedule a call: https://meetme.so/KentBittner/

If you’re feeling overwhelmed by your monthly financial obligations, you may want to consider using the equity you’ve built up in your home to consolidate debt and take advantage of today’s historically-low interest rates, which allows you to save money and improve your cash flow. 

With consolidated payments, you can efficiently eliminate debt as well as the stress and burden that comes along with stretching your finances to the max each month. There are a number of options available, however, so it’s important to consider which would work best for you.

Mortgage refinance

One of the most common ways to consolidate debt using your mortgage is through a refinance. This involves breaking your current mortgage agreement and rolling your outstanding debt into a new one, resulting in one easy payment. Your outstanding mortgage balance will be higher, but you’ll have peace of mind knowing that your debts are repaid and your high-interest debt isn’t continuing to grow. Typically, your lender will arrange to pay your creditors on your behalf. There may be a financial penalty for breaking your existing mortgage early, however, but it could still be advantageous to do so in order to pay off your higher interest debt right away. I’d be happy to help you weigh your options based on the penalty you’d face to break your mortgage mid-term vs how much the ongoing high-interest debt burden will cost you until your mortgage term comes up for renewal.

Home equity line of credit (HELOC)

A HELOC is a line of credit that uses your home’s equity as security that you can draw from for debt repayment. Unlike a loan, you don’t receive all of the funds at one time but, instead, you can access as much as you need and only pay interest on the amount withdrawn. As you make payments, the credit revolves and becomes available for you to use again. And because the credit is secured by your home, the interest rate is lower than what you would pay on an unsecured loan. Since you’re only required to make interest payments on the money borrowed, however, it’s important to have a repayment plan in place so you’re not constantly paying interest.

Home equity loan 

Similar to other types of loans, a home equity loan provides you with a one-time lump sum based on your available equity, which you can then use to repay your debts. Depending on your available equity, the amount you can borrow could potentially be much higher than with a personal loan. Similar to a HELOC, your home is used as collateral and, therefore, the loan itself carries less risk and lower interest than other loans. You’ll have a structured repayment plan over a set period of time and, with each payment made, you’ll reduce the balance as well as the interest, which is usually at a fixed rate. 

Reverse mortgage 

A reverse mortgage allows Canadian homeowners aged 55 and older to borrow against the equity in your home. This type of financing doesn’t require you to make regular monthly payments like you would with a traditional loan, which frees up money to then be used towards debt repayment. A reverse mortgage is only paid back when you sell or leave the house and, although interest rates tend to be a bit higher than with a traditional loan, they’re offset by the fact that repayment isn’t required until the loan comes due.

Once you’ve taken advantage of a debt consolidation strategy as a fresh financial start, it’s important not to fall back into the habit of overextending your finances or racking up credit cards simply because they’ve been paid off. This is your chance to wipe the slate clean and work towards financial freedom so you’ll be well prepared for what lies ahead.  

Have questions about consolidating your debt? Answers are a call or email away.

https://meetme.so/KentBittner/

Email: kent@bittnermortgages.com

Special Tax Considerations When Working from Home

Many Canadians worked from home for the first time in 2020, which means there will be extra questions to be answered when it comes time to do your taxes. Outlined below is what you need to know about claiming office expenses while working from home. 

Canada Revenue Agency (CRA) announced in 2020 that, even if you weren’t ‘required’ to work from home, but your employer provided you with the ‘choice’ to work at home because of COVID-19, CRA will consider you to have been required to work from home for purposes of claiming home office expenses for 2020.

CRA also announced two methods for claiming home office expenses for 2020: the new “temporary flat-rate method” and the “detailed method.”

New temporary flat-rate method

The temporary flat-rate method is a simplified process. You’re eligible to use this new method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020 due to COVID-19. 

Under this method, you simply claim $2 for each day you worked from home, up to a maximum of $400 (ie, $2/day for up to 200 working days) per individual. Each individual working from home can use the temporary flat-rate method to calculate their deduction for home office expenses and can each make a separate claim for up to $400. 

The benefits of using the flat-rate method are that you don’t have to track and keep any supporting documents to track your expenses nor do you have to allocate any expenses between employment and personal use. In addition, you don’t need a signed T2200S form from your employer.

Detailed method

When using the detailed method, you must have worked from home more than 50% of the time for a period of at least four consecutive weeks in 2020, and have a completed and signed form T2200S (or form T2200) from your employer.

If you choose the detailed method, you’re able to deduct a variety of expenses, such as the cost of rent, electricity, heating, home internet access fees and water, as well as maintenance and minor repair costs. Commissioned employees can also deduct home insurance, property taxes and leasing costs associated with a cell phone, computer, laptop, tablet, fax machine, etc that reasonably relate to earning commission income. 

Canada Revenue Agency support forms

• Form T2200S. This form is a declaration of employment for working at home due to COVID-19. This is a shorter version of Form T2200 that you get your employer to complete and sign if you worked from home in 2020 due to the COVID-19 pandemic and aren’t using the temporary flat-rate method. Your employer completes and signs this form to certify that you worked from home in 2020 due to COVID-19 and had to pay your own home office expenses.
• Form T777S. This form is a statement of employment expenses for working from home due to COVID-19. This form is used to calculate your claim for home office expenses.
• Home office expense calculator. CRA created this calculator to help employees calculate home office expenses. CRA has also expanded the list of eligible expenses that can be claimed to include home internet access fees.

Determining your workspace claim

Whether you work at the dining room table or in a spare bedroom, there are a number of factors to consider when calculating your employment use of the workspace, including:

• • Size of your home and workspace 
  • Types of workspaces 

 

• Hours per week you use the space for work 

 

When filing your taxes, It’s also advised to speak with a tax professional to ensure you maximize your savings.