Understanding your Credit Report

As credit has become more and more abundant in our society, your credit report, and thus your credit rating, has become more important in your daily life. Your credit rating affects all aspects of your financial activities when it comes to borrowing money. Your credit rating also has the ability to affect the job you get, the apartment you rent, and even the ability to open a bank account.

Your credit report itself is simply a listing of all of your mortgage and consumer debt. Here in Canada, the two main credit reporting agencies are Trans Union and Equifax. Both agencies have a credit history file on anyone who has ever borrowed money. Every time you borrow money, or make a payment on a loan or credit card, the lender then reports the information about the transaction to these two agencies. In addition to credit information, you will also find liens and judgments on your credit report as well as your address and possibly your work history. The accumulation of all of this information is called your credit report.

The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character. Whether we like it or not, our financial habits have a lot to say about the way in which we choose to live our lives.

The credit score, or beacon score, is a number which gives mortgage lenders an idea of your lending risk. Credit scores range from 300 to 900, the higher your credit score the better. The mortgage products and interest rate that you will qualify for are often determined by your credit score.

One thing that many people do not know is that you have the legal right to obtain a copy of your credit report. A mortgage professional can help you obtain a copy of this report and go through it with you to verify that all of the information is true and correct.

The good news is that your credit report is a working document. This means that you have the ability over time, to repair any damaged credit and increase your credit score.

Pay Off Your Mortgage Faster

Mortgages in Canada are generally amortized between 25 and 35 year terms. While this seems a long time, it does not have to take anyone that long to pay off their mortgage if they choose to do so in a shorter period of time.

With a little bit of thinking ahead, and a small bit of sacrifice, most people can manage to pay off their mortgage in a much shorter period of time by taking positive steps such as:

• Making mortgage payments each week, or even every other week. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month's mortgage payment each year. Paying your mortgage in this way can take your mortgage from 25 years down to approximately 21.
• When your income increases, increase the amount of your mortgage payments. Let's say you get a 5% raise each year at work. If you put that extra 5% of your income into your mortgage, your mortgage balance will drop much faster without feeling like you are changing your spending habits. 
• Mortgage lenders will also allow you to make extra payments on your mortgage balance each year. Just about everyone finds themselves with money they were not expecting at some point or another. Maybe you inherited some money from a distant relative or you received a nice holiday bonus at work. Apply this money to your mortgage as a lump-sum payment and watch the results. 
• Round up your mortgage payments. Every dollar counts when it comes to paying off your mortgage. The quicker you can pay off your loan, the more you will save in interest. A painless way to make your mortgage disappear faster is to round up your mortgage payments. So if your mortgage payments are $543, consider rounding up to $600 instead. The extra $57 will do wonders for your mortgage and chances are you will barely notice a difference in your monthly budget.
• Stay informed. Once you have a mortgage and start making your payments, it can be easy to just forget about it as it is an automatic payment. To be an informed homeowner, you need to keep up-to-date on interest rates and new mortgage options. You could potentially save a ton of money just by understanding what your options are.

By applying these strategies consistently over time, you will save money, pay less interest and pay off your mortgage years faster! 

To learn more about your options, your mortgage or if you have any mortgage questions in general, please do not hesitate to contact me.

Mortgage Life Insurance

Buying a home is one of the single largest purchases you will make in your lifetime. At Dominion Lending Centres we also believe it is an investment in you and your family’s financial future... an investment that needs to be protected.

Here are some quick facts:

• 45% of uninsured Canadians included life insurance among their top five financial priorities and 21% ranked it in their top three - yet they still have no coverage.

• 76% of parents said they worry about their family's financial situation in case of their death according to a recent Ipsos Reid report.

What would your family do if something unfortunate happened and they were left to make the mortgage payments on their own?

Mortgage Protection Insurance protects your investment while helping secure your family's financial well-being in the event of death of you and/or your spouse. Should something tragic result in the passing of you or your spouse, the mortgage on your home would be paid off, allowing surviving family members to use other existing insurance to carry on with life, maintain their lifestyle and recover from your loss.

The mortgage insurance offered through Dominion Lending Centres has some great features that traditional bank mortgage insurance doesn't provide. That includes portability - so when it is time to renew your mortgage you won't lose your coverage (or have to re-qualify) no matter how many times you change homes or lenders in the future - and premiums don't increase with changes in health or as you get older.

In addition, Mortgage Protection Plan includes two vital insurance products for your mortgage protection: Life Insurance and Total Disability Insurance.

With this coverage in place, your mortgage is protected not just in the event of death, but also if a serious accident or illness leaves you unable to work. Most traditional term life policies only cover you in the event of death.

HOW TO APPLY

Your Dominion Lending Centres mortgage professional can walk you through the ins-and-outs of mortgage life insurance, the applicable costs, as well as provide you with instant coverage and money back guarantee, just in case you choose alternative coverage and cancel your policy within 60 days.

Learning More about Home Equity

Many people find that one of the easiest and most affordable ways to access money is through the equity that they have accumulated in their home. This is a very popular option, especially when you have an excellent first mortgage in place.

Canadians purchase homes for a variety of reasons. Some want the stability of owning their own home, while others also look at home ownership as an investment vehicle. No matter what the reason, the truth is that home ownership has proven itself to be a good stable investment over time, and one which many Canadians are profiting from.

While many people have chosen to purchase their first home during these times of lower interest rates, there has also been a large movement to refinance home loans and pull out equity for home improvements, investments, college expenses, and even high interest debt consolidation. Canadians have been borrowing against their home's equity in record numbers, taking out billions of dollars in cash each year.

In years past, many saw their homes as a shelter of safety, yet today, they are more than ever before, willing to borrow against the equity owned in their homes to further their investment portfolios, get out of debt, send their children to university, make improvements to their home, or even boost their RRSP contributions. Where home equity was once sat upon, today it is often used to one's advantage.

While removing equity from your home can be a good idea, you should do so with caution and fully understand the benefits and possible risks. The best thing you can do is to consult a licensed mortgage professional and financial planner to discuss opportunities to make your home's equity work for you.

As always, if you have any questions about your mortgage, please do not hesitate to contact me - I am always here to help!

Energy Retrofits Done Right

Energy efficiency retrofits can reduce your energy consumption, impact on the environment and save you money. If not done properly, however, replacing windows, adding insulation and reducing air leaks can have unintended effects on your house, indoor air quality and your family’s safety.

So before the work is started, have your house checked for pre-existing conditions that could lead to problems down the road. These problems may include high humidity, water leaks, dampness and mold. Your house may also have stale air, lingering odours, soil gas intrusion and pollutant emissions from household products. Structural sags, cracks and deflections in the walls, floors or ceilings also represent problems that may need to be addressed first. Undertaking an energy efficiency building envelope retrofit before dealing with pre-existing conditions may make the problems worse and result in loss of time and money invested in the retrofit work.

For example, sealing air leaks can improve comfort, reduce heating costs and protect walls, windows and attic because it cuts down on the amount of leaking in to and out of your house. But, this can cause the air in the house to seem stale and odours to linger longer. Odours from previously unnoticed sources such as hobbies, pets or stored items may become more noticeable.

Measuring the air leakage of the house with a blower door test before and after the retrofit work can offer an idea of how much the air leakage of the house has been reduced. If the reduction is significant, it may be a good idea to add a bathroom fan, range hood, air exchanger or better yet, a heat recovery ventilator. When properly designed and installed, mechanical ventilation is more energy efficient and effective than uncontrolled air leakage.

Reducing air leaks can also decrease the air needed for the safe and efficient operation of furnaces, water heaters and fireplaces. Adding powerful or numerous exhaust fans can further increase the risk that fuel-fired appliances will not properly vent combustion gases – a situation known as “backdrafting”.

Providing adequate combustion air for heating appliances and sufficient make-up air to balance exhaust fans may be a necessary part of a building envelope insulation retrofit project. The safest solution is to convert fuel-fired appliances to direct-vent units or sealed-combustion units. The backdrafting risk can often be assessed by a qualified energy advisor. Mechanical contractors can be consulted regarding make-up air systems as well as direct-vent and sealed-combustion appliance options for furnaces, hot water tanks and fireplaces.

Retrofitting your home to make it more energy efficient and to reduce your heating and cooling costs is always a good idea. By recognizing and addressing the potential issues associated with any retrofit project, you’ll help reduce the likelihood of problems occurring after the work is done. Consult a qualified energy advisor, building professional, home inspector or contractor before you begin your energy efficiency retrofit to better understand, and plan for, pre-existing conditions and possible unintended effects of the retrofit project. Often, corrective measures can be planned that not only prevent problems, but also add value to the overall project.

To learn more about other sustainable technologies and practices that can improve the performance of your home, visit Canada Mortgage and Housing Corporation’s website at www.cmhc.ca or call 1-800-668-2642.