AN iNdepeNdeNt sectioN by mediAplANet to the suN panel of experts Know your worth discussing the recent property brothers’ tips rule changes on upping home value

September 2012 MortGaGes 3 TIPS FOR STRUCTURING A MORTGAGE TO FIT YOUR INDIVIDUAL REQUIREMENTS

PROFESSIONAL INSIGHT ON THE HOUSING MARKET

Love It Or List It’s realtor and top designer Hilary Farr answer tough homebuying questions PHOTO: BIG COAT PRODUCTIONS COAT BIG PHOTO:

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WE RECOMMEND Alan Cross looking for a stable place to invest your savings? Give mics 1 more than a passing MORTGAGE glance. REFINANCING IS pAGe 05 A GREAT WAY TO PAY THE “mortgage investment CURRENT HOME OR MORTGAGE LOAN corporations (mics) THAT YOU HAVE TAKEN aren’t seen as the lender of last resort anymore, we are viewed as an alternative lender.”

Gain tips from the experts p. 04 real estate and renovation insight from stars. Seeking out advice p. 06 brokers ask questions related to recent Even in times of change, a broker’s role as a client’s advocate is not going changes. anywhere, and mortgage brokers around the country continue to demonstrate value. trust in the experience and knowledge of Canada’s mortgage professionals mortGAGes 5th editioN, september 2012

his past spring, the fe- ges. But CAAMP also provided extensi- tion and ethical business practices. In Responsible for this issue: deral government ma- ve research to the federal government addition, the AMP can help mortgage Publisher: Heather Owsiacki [email protected] de its fourth set of that shows the vast majority of Canadi- professionals grow their business as an Designer: Adam Kereliuk changes to the mort- ans can handle a rate increase. The fe- increasing number of Canadian mort- [email protected] Contributors: Ken Donohue, Jared Dreyer, gage insurance rules deral government is walking a tightrope gage consumers are becoming more Diana McLaren, Jim Murphy, Emily Ritchie in 48 months. For most between concerns over debt levels and aware of the AMP designation and are Managing Director: Joshua Nagel mortgages, if you put maintaining a healthy housing market increasingly seeking the advice of mort- [email protected] less than 20% down on the purchase pri- which is important to the overall Cana- gage professionals. Business Developer: Jon Kent t [email protected] ce of a home, you are required by law in dian and British Columbian economies. While using the services of an AMP Canada to carry mortgage default insu- It is also important to note that Cana- is key, doing your own research is also Photo Credit: All images are from istockphoto.com unless otherwise accredited. rance. The federal government provides da is not in the same boat as the USA or important. In today’s modern world of a fi nancial guarantee to these insured Europe. We do not have the same pro- Jim Murphy technology, a range of mortgage related Distributed within: president and ceo, cAAmp The Vancouver Sun, September 2012 mortgages. So, as concern over hous- ducts as the USA; we fi nance our mort- information is available. There are con- This section was created by Mediaplanet ehold debt levels and the impact of po- gages diff erently and we have the back- was developed as part of CAAMP’s ongo- sumer websites available for a wide va- and did not involve The Vancouver Sun or its Editorial Departments. tential rate increases rise, the govern- stop of mortgage insurance. As a result, ing commitment to increasing the level riety of mortgage related information ment has toughened mortgage borro- Canada’s overall economy and housing of professionalism in Canada’s mortga- including mortgage calculators, fi rst-ti- wing standards. market remain in relatively good shape ge industry. me buyer check lists and mortgage glos- especially when compared to our major AMPs demonstrate commitment to saries. Understanding each step of the Necessary changes trading partners. the highest standards of industry per- home buying process is key to ensuring Many of the original changes were formance. They diff erentiate them- you will make a wise decision that suits needed. The government eliminated 40 Look to experts for guidance selves from other mortgage professio- your fi nancial situation. year amortizations and no money down During such times, it is important to nals and provide assurances to business mortgages. The mortgage industry, in- seek the advice of an Accredited Mortga- partners and clients that they are deal- cluding the Canadian Association of ge Professional (AMP). The AMP desig- ing with a qualifi ed professional who Accredited Mortgage Professionals nation is the only profi ciency standard has met the highest standards of indu- JIM MURPHY (CAAMP), supported these initial chan- for Canada’s mortgage professionals and stry performance, continuing educa- [email protected] New mortgage rules bring stability to the canadian market FOLLOW US ON FACEBOOK AND TWITTER! www.facebook.com/MediaplanetCA hile many At first glance this may seem res- means you won’t be able to borrow bring a more balanced consumer de- www.twitter.com/MediaplanetCA feared the trictive, however, in the long run as much against higher priced ho- bt load and help all Canadians cre- new mort- these changes will instil more dis- mes, as this policy was put into ef- ate a valuable property asset, not a

gage rules cipline and stability into the mar- fect to ensure more prudent borro- liability. mediaplanet’s business is to create new would most ket. This limits consumers to using wing and lending. customers for our advertisers by providing readers with high quality editorial content JARED DREYER negative- their homes as an ATM, and sup- At the end of the day, it is im- that motivates them to act. ly impact ports building strong equity in the portant to know that these changes [email protected] theW first time homebuyer market, home yet again. in actuality these changes present an opportune time for our clients to take advantage of the historical low mortgage rates and allow for nego- tiations on better housing prices, We Value Canada specifically in the condo/townhome market. Take a look at these num- bers to help put it in perspective:

■ In 2007: 40 years of amortization Jared Dreyer, AMP President, MBABC (the longest you could get at the time) at an average interest rate of 5.71% - $350,000 = $1,831* would Along the same lines, secured li- have been your monthly mortgage nes of credit will also see changes payment. this fall. They will be limited to a Canada’s most authoritative voice in real property valuation! maximum of 65% of your home’s ■ In 2012: 25 years of amortization value, which is lower than the cur- When the market’s changing, at an average interest rate of 3.29% rent maximum of 80%. Some len- whom can you trust? REAL - $350,000 = $1,704* monthly mort- ders have already started to imple- gage payment. ment these lending policy changes. The experts: AIC professionals. Therefore, if you are considering ac- *For sample purposes only. Rates are sub- ject to change. On approved credit. cessing equity in your home with a We are Canada’s leading authority in real line of credit product, you will want property valuation. Designated members VALUE Right away, homebuyers will no- to explore this option sooner rather of AIC can help you make smarter choices tice a truly substantial savings in than later. with in-depth analysis, market insights and that you’ll pay your mortgage off 15 years earlier and save approxima- Balanced consumer debt load practical solutions — from acquisition and development tely $330,000 in interest that would Regionally, the policy change on to management and disposal. G et the real property EXPERTS have developed over the 40-year million dollar properties (proper- experts working for you. amortization. ties purchased over $1 million will no longer be eligible for mortgage Consult an AIC professional. Look for members who Impact of future changes insurance) has had a bit more of an Probably the greatest impact of the- impact in BC and Ontario than oth- hold the AACI, P.App or CRA designation. se changes is for consumers looking er parts of the country due to our to refinance. Refinancing has been higher end housing prices. That be- Appraisal Institute of Canada reduced from 85% to 80% loan-to-va- ing said, if the home purchase pri- lue (LTV). While 5% does not seem li- ce is under $1 million dollars, con- British Columbia ke significant change, a settling of sumers can still purchase up to 95% home prices in some regions in BC LTV with insurance. Anything over, 210 - 10451 Shellbridge Way, Richmond, British Columbia V6X 2W8 has affected their property values and a 20% down payment is requi- t: 604.284-5515 • f: 604.284-5514• [email protected] • www.appraisal.bc.ca and the equity available therein. red to purchase the property. This

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866-698-5388 Toll free Call Brian Chelin or Mike Saba today FINANCIAL CORPORATION Or contact us at: [email protected] or [email protected] Visit our website at: www.lanyardgroup.com 4 · september 2012 AN iNdepeNdeNt sectioN by mediAplANet to the vANcouver suN InspIratIon celebrate homeownership: 2 DON’T MISS! YOU MAY BE ABLE seek out the professionals TO BORROW AGAINST THE EQUITY IN YOUR When a house no longer feels like a home, fi nancial and emotional concerns can HOME TO FINANCE OTHER NEEDS SUCH AS A HOME leave a homeowner wondering — Renovate or real estate? hosts RENOVATION OR David and Hilary help fed-up homeowners decide. COLLEGE TUITION

■ Question: “My daughter and ments format. Your home is your big- to help them navigate this excit- but oversized to give it an edge. With her husba nd are looking to buy gest investment… not just a roof over ing but complicated terrain?” fall we inevitably start to think of their fi rst home; what advice your head. The fact is, the less money cooler temperatures and want our wou ld you give to parents like you give to the bank, the more that go- ■ A — David : “There are three ve- homes to be inviting havens when myself?” es into your pocket when you eventu- ry important people that will help we enter them.” ally sell. you in making that fi rst purchase go LTD MEDIA INTERNATIONAL CINEFLIX PHOTO: ■ Answer — David : “As a parent This is easily done by shortening your smoothly, fun and fi nancially smart. you obviously want what’s best for your amortization period, making your pay- The fi rst is your realtor, who is your EMILY RITCHIE insight from the children, and it’s normal to want to be ments weekly or bi-weekly and making encyclopedia of everything relating to [email protected] part of the process to make sure they the lump sum payments allowable on the house, such as neighborhood, pri- property brothers make a decision that is best for them. a yearly basis. Keep in mind – in order cing and negotiating. How much you are part of the process to do this and still have aff ordable pay- The second is your mortgage speci- ■ What is your current might be determined by the age and bu- ments, it might mean buying a $400,000 alist, advising you and approving you assessment of the BC real siness smarts of your child. If your kids house instead of a $500,000 house.” for likely the biggest debt you’ll ha- estate market — how do you are young and have very little expe- ve. You are going to have this mort- see it changing in the next rience in the business world, being the- ■ Q: “What are some renova- gage for years to come so you year? re for them is very important. tions that you recommend that want to be sure it is tailored to Ask lots of questions about what your can save me money?” your needs. “The BC real estate market is main- children want and need in a house. If The third person are your taining a steady pace. According to the you are going to go and look at houses ■ A — David : “Most renovations cost friends that have already Real Estate Board of Greater Vancou- with them, give them space — let them money and almost never save you mo- purchased a home – they ver, the benchmark price of residenti- go through the house alone with their ney, but many can pay for themselves are fi lled with informa- al property in Greater Vancouver is up agent fi rst, and if they say they love it over time. These are the energy saving tion, stories, helpful tips 3.7% since April 2011. Even though the and want to buy it, then ask them to take renovations — replacing old windows and general advice, [and actual number of sales this month has you through it and tell you why they lo- that are drafty and leak will save you they] have no investment in declined since last year, I feel the mar- ve it. From there you can give them your money in heating costs, and prevent you buying a house... except to make ket is in solid shape. Chat with your opinion and hopefully come to a conclu- any water damage that could cost you sure you get what you want.” broker to see what rates are available sion.” thousands in unnecessary repairs. New to you. It’s possible to make money in appliances versus old energy-sucking ■ Q: “Are there any new trends a hot or cold market, just do your ho- ■ Q: “What is the best way to appliances can also save money. There for fall and winter that people mework so that you ensure you are build equity throu gh my home?” is always going to be an outlay of money are looking to incorporate in making a sound investment.” when you are doing any improvement their own homes?” ■ A — David : “This starts before you to your house but unlike a new granite Brand new episodes of Property Brothers air even buy the house, through smart fi - countertop — windows and new appli- ■ A — Hilary : “I am not seeing Tuesday’s at 8pm on W Network. nancing. When setting up a mortgage, ances can begin to pay you back.” any radical new trends for fall. Mo- LOVE IT OR LIST IT? The dynamic duo compete most people try to get the most for the re a reinforcement of what we’ve every episode ensuring least. Wanting the biggest house they ■ Q: “The hou sing market is been seeing for the last year. Natu- homeowners find happiness File Name: BOR_AD_Lending_draw_E_VanSun_rev confusing, especially for new Publications: Vancouverin a new Sun or renovated (Media Planet home. Supplement EMILY RITCHIE can aff ord, at the lowest payments pos- Trim: 11.33” x 10.2” ral woods, hardwood that is lighter PHOTO: BIG COAT PRODUCTIONS Canadian Marketing Material Deadline: Sept 13, 2012 sible, they take on longer amortization home buyers.Bleed: 0" Who Safety: do 0”you Mech re- Res: 300dpibut still warm, with a nod to the past [email protected] 100 Yonge Street, 6th Floor Insertion Dates: September 17, 2012 periods and the standard monthlyToronto, pay- ON M5C commend2W1 Colours: home CMYK buyers consult using designs such as herringbone

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TIPS

Pino Decina senior vice president, residential mortgage lending, home trust 3 company IF YOU OWN A SMALL BUSINESS, YOU MAY WANT TO LOOK TO A PRIVATE Can’t qualify at a bank? LENDER FOR ALTERNATIVE Try an alternative lender. FINANCING

New rules tightening mortgage eligi- bility aren’t the only barrier to getting into the housing market. Alternative lenders serve groups typically denied loans by major banks, says Pino Deci- na, Senior Vice President of Residen- tial Mortgage Lending, Home Trust Company.

These are people who:

■ don’t meet the bank’s fi rst and foremost criteria of income (inclu- ding retirees who’ve built signifi - cant home equity) ■ have an insuffi cient history of credit (often new immigrants who simply haven’t been in canada long enough) planning to invest? look to ■ had previous credit diffi culties but have since resolved these capitalize in mortgage fi nancing One group who fi nd themselves in one or more of these categories are pe- ople who are self-employed, especi- ally those who have recently started hances are you’ve “it’s very rewarding, because each of pect about 8%, which is greater than their own business. In such cases they never heard of a one would currently earn on many in- may only be able to provide tax assess- Mortgage Invest- our clients has a different story... we vestments. And with recent changes to ments for the past year, whereas banks ment Corporation are able to take time and assess each mortgage rules, the banks are tighten- often require two or three years’ worth (MIC), or are hesi- person individually.” ing up on their lending. This is where a of such documentation. tant as to what they MIC can help fi nance that home mort- “This doesn’t mean the person isn’t Alan Cross do. But if your bank president, bcmmA gage or a residential construction pro- a good candidate for approval,” says Chas turned you down for a mortgage, or ject that traditional banks are unsure of. Decina. “In fact their client list may you’re looking for a stable place to invest include the very same people they’ve your savings, then you’ll want to give impaired credit, but we are able to take or are new to Canada and need to build Looking to alternatives worked for in the past.” MICs more than a passing glance. time and assess each person individu- up a credit history, and then they’ll get Fisgard Capital is one of the largest Decina says that an alternative len- Mortgage Investment Corporations ally.” a mortgage with a conventional bank. MICs and holds about 400 mortgages. der who departs from a standardized were set up by the government in the Cross adds that often people only While yields can vary depending on “We are larger than 70-80% of credit cookie-cutter assessment will be the 1970s to increase the availability of need a year or less to repair their credit the type of MIC, investors can often ex- unions, and if you walked into our offi - best bet for someone who doesn’t qua- mortgage funds, but it has only been in ce it would look just like a bank, we just lify for a bank mortgage. He advises the past decade that MICs have become QUESTIONS don’t take deposits,” says Hali Strand- borrowers to look for a lender who: more common. The concept is pretty lund, Fisgard’s President of Business simple – MICs gather investment capi- Development. “[MICs] aren’t seen as ■ conducts an in-depth personal tal and in turn provide residential mort- Questions to ask before investing the lender of last resort anymore, we interview gages. All earnings are distributed to are viewed as an alternative lender.” ■ Accepts references from a wide Investing in mortgages can be a way to get a solid return; variety of sources that can give a shareholders, and the dividend is then but don’t leap without a careful look. If you’ve been turned away from the treated as interest-earned income. bank, then a MIC could be your solu- fuller picture of your risk profi le ■ What is their track record and Consider MICs that have produced divi- tion. And for investors, the beauty of ■ Allows tax assessments from Individual assessments longevity? dends without interruption for several the MIC is that they have professional previous salary if newly self-em- “More than $1.5 billion in mortgage ca- years. managers, so you can invest in mortga- ployed pital has been raised by our 20 mem- ■ Is the MIC a member of the Better Busi- ges without having to worry about the ■ Knows how to assess foreign bers,” says Alan Cross, President of the ness Bureau? Ask the BCMMA for references ■ When can you redeem (cash out) your administration. documentation including income BC MIC Manager Association (BCMMA), investment? Avoid investing in a MIC that ■ doesn’t hold past credit pro- and President of First Circle Financial. ■ What management experience and is vague or open-ended in terms of when blems against you if your recent “It’s very rewarding, because each of our qualifi cations does the MIC have? you can get your money out. If it is not clear history is up to par clients has a diff erent story. Some are as to when you can get your money out, dealing with family tragedies, illness, ■ What is the consistency of dividends? then don’t put it in. KEN DONOHUE DIANA MCLAREN job loss, separation of a marriage or have [email protected] [email protected]

6 · september 2012 AN iNdepeNdeNt sectioN by mediAplANet to the vANcouver suN panel of experts

Gino Tieri Lester Shore Mark Kerzner Vice President, Sales Vice President, President & COO, MCAP Service Corporation Optimum Mortgage The Mortgage Group Canada Canadian Western Bank (TMG)

Question 1: There will always be competitive pressu- In regards to high ratio rules becoming There are hundreds of thousands of res in our market as there is in any other – it slightly more restrictive – although these ru- housing sales each year – while the policy all comes down to understanding what you les have shrunk the market, will this be a per- changes may slow down the real estate and With the recent changes to are signing up for. Mortgages are not as simp- manent reduction? The consumer must ad- mortgage markets, it will NOT eliminate it. It policies, the market has shrunk le as some make them out to be, especially just; people want to own their own home and is a competitive business and as such we all when rate is all that is considered. You need to will do what is needed to meet the criteria. have access to similar interest rates; what dif- and there is more competitive educate yourself on what is contained within With respect to the new conventional guide- ferentiates us is the service we provide to our pressure — how do you deal with the mortgage; pre-payment terms, penalties, lines, we believe brokers have an opportunity clients. For many of our clients, their broker is fixed vs. variable, open vs. closed, etc. When to prosper during this period of change. Talk a problem solver and a trusted advisor. Mort- the increased competitiveness in a borrower works with a licensed mortgage to your lender, understand their ”new” requi- gage brokers are not limited to home purcha- the market place? broker, that broker can educate you so that rements and communicate these new rules ses – we work with clients who are refinan- you are fully informed. The broker will take to your clients. By having a clear understan- cing to consolidate debt, and who are looking the time to first understand your needs, both ding of your clients’ needs and the lender re- for alternatives at the time of renewal. There short term and long term, then recommend quirements you can structure a solution that are still plenty of reasons mortgage brokers the right mortgage and present options. is in the client’s best interest. will thrive, even in today’s environment.

Question 2: With respect to choice, I disagree that Our world has suddenly become more I understand why it may seem as the market is limited. There are numerous complicated. How should you, the residential though there is less choice, and in fact so- lenders in the market place for brokers to mortgage broker handle this? Only deal with me lenders have left the market. As brokers, In the current market, it work with on behalf of their customers. I re- a lender who has reliable and responsible we are fortunate to have a variety of lenders seems like there is an increased commend that if you are looking for a mort- business development managers. Connect that we can access who have different criteria gage broker, do some research first. Don’t with them - make sure you understand that than the banks. In fact, we also see new len- feeling of less choice and more just look on the internet for the lowest rate, lender’s criteria, get access to their under- ders coming on board to fill the gap others ha- restriction — what are some as those rates are not always available and writers and make sure you have clear com- ve left. We even have three mortgage default tips to handle this? may have restrictive conditions. Each consu- munication with them. When dealing with insurers in Canada. The best thing someone mer has their own specific needs. If you don’t your client, make sure you understand their can do is get educated on the various products know who the brokers are in your commu- circumstances and ensure the transaction is and understand what works best for them. nity, here are some ways to find one; contact in the best financial interest of the client. Re- There are still plenty of interesting mortga- your provincial mortgage broker association, member, you are your client’s financial advi- ges available, and no channel more know- web search, ask your lawyer, ask your finan- sor in the largest transaction most consume- ledgeable and informed than the mortgage cial advisor, etc. There are many ways to find a rs will ever make. You must ensure they are broker channel in Canada to help customers licensed broker in your area that can help you. not getting in over their heads. with these decisions.

Question 3: It comes down to demonstrating that As a lender who is focused on alternative In any market you have to be accessible, you add value. There is no better way of ac- lending, we know that our success is comple- knowledgeable and add value. Many of our complishing this then using actual custo- tely dependent on the success of our brokers. clients are doing research online and we In a shrinking market, how do mer testimonials that show credibility. Therefore, we adapt and add value by building encourage that. We take care of our exis- you adapt and add value? When you deliver on your promises and you relationships with our brokers and doing what ting clients, build our referral network, un- add the value your clients are seeking for, we can to aid in their success. The foundation derstand our lenders and keep educating others will come to you looking for advice of our process is to provide our brokers with ourselves. We add value by making sure we and meaningful solutions. There are four ba- clear, consistent and frequent communica- understand what a client wants and needs – sic reasons why brokers add value to Cana- tion. We stress error free, hassle free, on time their financial and personal goals – not just in dian consumers: choice, advice, service, and delivery of approvals and mortgage proceeds, the short term but over the long haul. Brokers savings. In my opinion, these are the four and teach you how to identify an alternative can also counsel clients who have less-than- pillars that create the advantages of working borrower and how to close your client with our stellar credit or home buyers who don’t qua- with a broker. commitment. In a nutshell, we will show you lify under the new mortgage rules on ways how to become a more effective broker. they can get that home.

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RMG Mortgages works with a national network of independent, licensed professional mortgage Did you know? brokers. So whether it’s • 41% of Canadians believe your fi rst home, a move up their debt is too high 1

for a growing family • 23% of mortgage holders have increased their or downsizing for empty monthly payments during nesters, RMG Mortgages the past year 2 has the mortgage solution • The average lump-sum payment last year was for you. $12,500 3

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www.RMGmortgages.ca 1PwC Consumer Lending Survey 2012: Maxed out Canadians ready to cut debt 2 CAAMP May 2012 Report: Confi dence in the Canadian Market 3 ibid