Some of the most common strategies for families and parents to assist children with down payment funds are means of gifted funds or co-signing. The Canadian banking system is very conservative in this process. All banks have to follow the Anti-Money Laundering process in Canada, so here are a few ways to allow significant funds to be transferred to families to purchase a home.

Gifted funds – This is the most common way parents help children in today’s market. Parents are not on the mortgage or the title but can assist with gifting funds to children. The process is for a gift letter to be signed by children and the parents confirming the number of funds that are gifted, and this letter comes with your mortgage approval from whatever bank is the best fit. Then, fifteen business days before the completion of the purchase, the funds must be deposited into the child’s account. Gifted funds from parents can come from savings, investments, home equity line of credit or reverse mortgage.

Parents have two options for accessing funds from home equity:

• The first option is to take a mortgage or home equity line of credit against your existing home, handled as a traditional mortgage process. Providing documentation for income, debts and assets, as well as home appraisal, is required for this process. A HELOC is tax-free, and the equity takeout would not be taxed.
• The second option is a Reverse Mortgage. The Reverse Mortgage is the fastest growing product in Canada for those 55 and up as the rates are better than current HELOC rates with the banks, and no stress test applies. Often to get a HELOC, pensions only allow for a low limit due to the stress test, and you would also have to make monthly payments with a mortgage or HELOC. With a Reverse Mortgage, you can access up to 55% of your home equity, and no fees are required until you move out of the home. There is no income, assets or debt confirmation for this process; they base the approval on age and equity in the house. A home appraisal is required.

Co-Signing – This process is in place most commonly when parents do not have funds to assist with a gift. Parents then can come on to the mortgage application and on the title to the new property. The primary purpose of this is to assist with a qualification in today’s interest rate market, as the stress test makes it very difficult for young families to qualify in today’s real estate market. As co-signers, parents are on the mortgage and the title, requiring the same information as the primary borrowers, such as income and debts. There is no set time that parents can be on the mortgage and title. Still, the most common is for the first term of the mortgage. Then children would ideally release the parents from the mortgage and title once rates have come down. After that, the mortgage balance is less, making it easier to qualify on their own.

The Primex team can help figure out what is best for you with having access to over 90 mortgage lenders, it is easy to find a product that is right for you and your family. We also help with coordinating on your behalf. Confidentiality is key and I can assure that your personal and financial information is never shared across family members. You can CLICK HERE to book a call with Trish to start the process.

604-552-6190

Support@primexmortgages.com

Trish & The Primex team

When it comes to home ownership, 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!

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 prepayment privilege 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 prepayment 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 prepayment 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 your mortgage is coming up for renewal, this is a great time to look at refinancing to a shorter amortization period. While 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 us to ensure these options are available to you and avoid any potential penalties.

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

You can reach us at 604-552-6190 or support@primexmortgages.com

CLICK HERE to book a quick call to review your mortgage with Trish!

Trish & The Primex Team

Approximately 20% of Canadians are self-employed, that’s about 7.9 million people. Making this an important segment in the mortgage and financing space. When it comes to self-employed individuals seeking a mortgage, there are some key things to note as this process can differ from the standard mortgage.

Qualifying for a Mortgage

In order to obtain a mortgage as a self-employed individual, most lenders require personal tax Notices of Assessment and respective T1 generals be included with the mortgage application for the previous two years. Typically, individuals who can provide this proof of income – and with acceptable income levels – have little issue obtaining a mortgage product and rates available to the traditional borrower.

Self-Employed Categories

• For those self-employed individuals who cannot provide the Revenue Canada documents, you will be required to put down 20% and may have higher interest rates.
• If you can provide the tax documents and don’t have enough stated income, due to write-offs, then you have to do a minimum of 10% down with standard interest rates.
  • If you are able to put down less than 20% down payment when relying on stated income, the default insurance premiums are higher.
• If you can provide the tax documents, and you have high enough income, then there are no restrictions.

Documentation Requirements

For those individuals who are self-employed, you must provide the following, in addition to your standard documentation:

• For incorporated businesses – two years of accountant prepared financial statements (Income Statement and Balance Sheet)
• Two most recent years of Personal NOAs (Notice of Assessments) and tax returns
• Potentially 6-12 months of business bank statements
• Confirmation that GST/Source Deductions are current

Calculating Income

When it comes to calculating income for a self-employed application, lenders will either take an average of two years’ net income or your most recent annual income if it’s lower.

If you’re self-employed and looking to qualify for a mortgage, reach out to us at Primex Mortgages today! We can work with you to ensure you have the necessary documentation, talk about your options and obtain a pre-approval to help you understand how much you qualify for.

You can call us at 604-552-6190 or you can CLICK HERE to book a call with Trish!