June 2018

Nick Kaaki
Mortgage Broker
Dominion Lending Centres The Mortgage Source
M08000604 FSCO # 10145 Independently Owned & Operated.
Phone: 613-232-0023 ext 240
Cell: 613-852-0908
Fax: 613-232-5212

In this issue

Saving up for your dream home  
Breaking up with your mortgage can be hard to do  
About Dominion Lending Centres & DLC Leasing  
Homeowner Tips  
Did You Know...  


Welcome to the June issue of my monthly newsletter!

This month’s edition looks at saving up for a down payment plus the reasons why people break their mortgage early and how to avoid costly penalties. Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!


Saving up for your dream home


If you’re just starting out on a journey of homeownership, the prospect of coming up with a hefty down payment can bring that trip to a quick halt. Whether you’re a young person starting out in adult life, or your income has stalled for years, putting together a five or even six-figure down payment on a home can seem virtually impossible. And while it isn’t easy with all the other costs in life, it is possible but it does take some discipline.

Mortgage brokers have seen it all. We’ve had clients living in big homes and driving fancy cars, only to find out they have nothing in their savings. On the other hand, we’ve seen clients making a below average salary with six figures in their bank accounts because they’ve been disciplined in saving over many years.

So it really depends on the person.

Regardless of what you earn, put aside 10 per cent of what you get paid. While that sounds nice, you might be wondering how that’s even possible, especially if you’re not used to saving. I’d recommend having that money put aside in an automated way. All the banks offer services that can help you force save.

Though it might feel painful at first, after a couple months you’ll get used to it and you won’t miss the extra money at all.


If you’re a saver, you’re eventually going to get where you need to be, maybe not as quickly as you’d like but if you’re a spender then you’ll likely be on treadmill to nowhere.

At the end of the day, when you get in the true habit of saving, it’s amazing how quickly that will compound and how quickly you can save a lot of money.

Now that you’re on track to save, there is another aspect you need to know about your down payment.

While this might sound contrary to conventional wisdom, a bigger down payment isn’t necessarily better, or the goal.

Sure, if you have no debt at all, put as much down as you can.

But most of us have some debt, and many of us are carrying a lot of debt and paying out hundreds of dollars a month to keep the bill collector away. You are better off putting less down and using the rest to pay off your consumer debt.

Keep in mind, every $400 in monthly payments roughly translates into $100,000 of purchasing power on a mortgage. If you can get rid of existing consumer debt, you’ll qualify for the larger amount you’re looking for without having larger down payment.


Breaking up with your mortgage can be hard to do


It’s hard to look past what’s right in front of you. That can be said for a lot of things in life, including a mortgage.

So it should come as no surprise that roughly six-in-10 homeowners with the standard five-year fixed rate mortgage break their terms within three years. And as brokers, we’ve heard all of the reasons. Some are good and some are less fortunate. There are those who want to leverage recent large increased in property value for investment terms, or they want to get some equity out of their home to do some renovations. In other cases, it can be life events like divorce, new relationship, the kids going off to college, or just paying down some built up credit card or consumer debt. Some people are lucky enough to be in a position to pay off the mortgage early.

In fact, if you’re reading this and have had a mortgage long enough, one of the things listed above has probably come into your life. But they all come at a cost. So as you sit down to either renew or get a new mortgage, take some time to think about the future. Not five months ahead, but five, seven or even 10 years ahead.

If you’re really not sure what the future that far away is going to look like, you need to consider some options before you sign on the dotted line. It could save you money.

If you’re a fixed-rate person, it’s important to understand




how your lender is going to calculate the penalty when you break the mortgage.

Big banks calculate penalties based on the discount they gave you off of their posted rates at the time you first got your mortgage. They take their new posted rate for the amount of time you have left in your mortgage (3-years, 4-years etc.), apply the same Discount they first gave you and then calculate how much interest they would lose as the difference between the two for the rest of the term calculated on your current balance. That is your penalty and it can be quite hefty.

But other lenders like credit unions will use the interest rate differential or three month interest penalty.

What can you do? You could sign on for a fixed-year rate for a shorter term, like three years. That just obviously shortens the length of the mortgage. Or you can also consider a variable rate since the penalties to break the term are much lower.

While it may be tempting to just stick with the big bank, you’ll want to talk to a mortgage broker first. Mortgage brokers have access to all kinds of lenders from credit unions to monolines (a monoline is considered a company specializing in a single type of financial service, like a mortgage) which can arrange better terms if you do need to cut your mortgage early.


Homeowner Tips

Choosing a Home Security Company:

Once the decision has been made to have a security system installed in your home, don’t simply open the phone book or go online and choose the very first company listed. It’s best to talk to friends and neighbours to see what company they use. Find out if they have been pleased with the company. Also make sure that you check with the Better Business Bureau to see if there have been any reports made against the company. Look for a company that has been around for several years and seek references from some of their existing customers.


About Dominion Lending Centres & DLC Leasing

We are Canada's largest and fastest-growing mortgage brokerage!
We have more than 2,600 Mortgage Professionals from more than 350 locations across the country!
Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
We work for you, not the lenders, so your best interests will always be our number one priority
We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
We close loans in all 10 provinces and 3 territories.
We can process your mortgage in as few as 7 days.
We are the preferred mortgage lender for several of Canada's top companies.
Dominion Lending Centres' Mortgage Professionals are available anytime, anywhere, evenings and weekends - and we'll even come to you!

Mortgage repayments should not account for any more than 40% of your monthly income, preferably less. Anything more is considered “mortgage stress” because it leaves you with little, if anything, left over once other homeownership costs and living expenses are accounted for. I can help you stick to what you can afford.