Homeownership Is Still Within Reach — Why a Strong Budget Is Your Best Strategy in Today’s Market!

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For many Canadians, navigating the housing market feels more complicated than ever. Rising interest rates, inflation, and shifting economic forecasts have created understandable uncertainty for anyone thinking about buying a home. The question clients ask most often is straightforward: “Can I still afford to buy?”

The answer is yes — but the approach is different today than it was even a few years ago. The key to a confident, sustainable home purchase isn’t just mortgage approval. It’s understanding your personal budget and making decisions that support long-term financial health.

As a mortgage professional committed to helping buyers across British Columbia, here’s the guidance I give clients who are looking for clarity in an unpredictable market.

Start With Your Real Affordability — Not the Maximum Approval

A lender’s approval is based on standardized guidelines, formulas, and ratios. While those matter, they don’t reflect the full picture of your life: childcare costs, car loans, commuting, groceries, or the activities that make your lifestyle possible.

Mortgage qualification determines what you can borrow.
Your budget determines what you should borrow.

Before beginning your home search, build a clear, honest picture of your monthly cash flow. This becomes your anchor. When you know your comfort zone, you can shop confidently and avoid overstretching in a market where every dollar matters.

Plan for Long-Term Stability — Not Just Today’s Payment

Interest rates have changed quickly in recent years, and renewal costs can influence affordability just as much as your initial mortgage term. That’s why understanding your long-term financial plan is essential.

Your mortgage strategy should reflect:

  • Your tolerance for rate fluctuations

  • Your income stability

  • Your desire for predictability vs. flexibility

  • The potential for future rate adjustments at renewal

  • Your long-term savings and investment goals

A well-chosen mortgage product is one that supports your future—not just your first five years.

A Good Budget Doesn’t Limit You — It Protects You

Too often, buyers think affordability means settling. In reality, clarity on your budget empowers you. When you know your financial boundaries, you can focus on homes that truly fit your lifestyle and long-term goals.

A strong budget helps you:

  • Avoid the stress of being “house poor”

  • Maintain your quality of life

  • Protect your savings and emergency funds

  • Make a confident purchase without second-guessing

Buying within your comfort zone creates room for stability, growth, and peace of mind.

Focus on What You Can Control

Headlines and forecasts shift daily, and national housing debates can feel overwhelming. But while you can’t control interest-rate decisions or policy announcements, you can control the fundamentals that put you in a strong buying position.

Focus on:

  • Strengthening your credit

  • Reducing high-interest debt

  • Building a steady savings plan

  • Understanding your true affordability

  • Choosing a mortgage product tailored to your needs

  • Planning for both today’s payment and your future renewal

This is the foundation of a homebuying strategy that works in any economic environment.

Housing Is Still Achievable — With the Right Plan

Despite affordability challenges, Canadians are still purchasing homes every day. The buyers who succeed are not always the ones with the highest incomes—they’re the ones with the best strategy.

That strategy starts with:

  • Knowledge

  • Preparation

  • The right mortgage plan

  • A budget that supports long-term success

Homeownership doesn’t need to be overwhelming. With professional guidance and a realistic financial roadmap, it can be a smart, stable step toward your future.

Ready to Explore Your Mortgage Options?

Whether you’re planning to buy now or in the future, an early conversation can give you clarity and confidence.

My goal is to support my clients while they navigate the homebuying process.  We don’t charge for this service as our goal is support as many would-be home purchasers and those looking to refinance/renew their mortgages in this ever-changing market.

Call TODAY and let’s see what is possible!

Kari Gares

Mortgage Consultant

“Flexing Into a Variable Rate: How My Gym Buddy Almost Ruined My Mortgage”

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Not everyone can give “good” advice!

There I was, minding my business on the rowing machine, when Chad—let’s call him Chad because of course his name is Chad—leans over between sets and drops the kind of unsolicited financial advice usually reserved for Reddit threads and that one uncle at family dinners.

“Bro, don’t even look at fixed rates. Variable is the move. It’s what all the smart investors are doing. Trust me.”

Ah yes, trust me—the two least comforting words in the world of mortgage financing.

The Seduction of the Variable Rate

At first glance, variable rates are tempting. They’re like that gym membership you sign up for in January—lower monthly costs at the start, promises of flexibility, and a vague sense of superiority over your friends locked into fixed terms.

“Why pay more?” Chad asked while curling his body weight and ego simultaneously. “Ride the wave, bro. Rates always drop.”

Spoiler: they don’t and they didn’t.

Fast-Forward: The Bank of Canada Has Entered the Chat

Turns out, the only thing variable about my new mortgage was how much anxiety it gave me.

The Bank of Canada began hiking rates faster than Chad can shotgun a protein shake. What started as a “smart move” quickly turned into me calculating my payment increases with the same dread most people reserve for root canals and tax season.

Each rate hike felt like leg day—painful, recurring, and impossible to skip.

Here’s the Thing: Mortgages Aren’t One-Size-Fits-All

Variable rates can absolutely make sense—for some borrowers. But the right choice depends on:
✔️ Your income stability
✔️ Your risk tolerance
✔️ How long you plan to stay in the home
✔️ Whether you’ve budgeted for potential rate increases
✔️ If you like your heart rate spiking for reasons other than cardio

Just because someone made money on a variable rate five years ago doesn’t mean it’s the right fit for you now—especially in today’s economic climate where the only thing predictable is unpredictability.

Real Advice Needs More Than Gym Talk

A mortgage is probably the biggest financial commitment of your life. Maybe don’t base it on locker room banter.

Talk to a licensed mortgage professional—someone who actually knows how to spell “amortization,” understands how the prime rate works, and isn’t judging your deadlift form.

The Happy Ending (with a few stress sweats)

Eventually, I refinanced. I got the right product for me this time. One that aligned with my actual financial goals—not Chad’s dream of becoming the next big real estate mogul-slash-podcast host.

I still see Chad at the gym. He’s doing well.

Last I heard, he’s giving advice on crypto & options!

Variable rates aren’t bad—blindly taking them is.

If you’re going to gamble, at least know the odds. And maybe get your mortgage advice from someone who wears a suit (or pants at least) and understands the bond market, not just someone who owns a shaker bottle collection.

“The Great House Hunt… Without a Pre-Approval”: Why Falling in Love With a Home Before Talking to a Mortgage Broker Can End in Disappointment

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You walk into an open house. The sun hits the hardwood floors just right, there’s a faint smell of fresh-baked cookies in the air, and for a fleeting moment, you can see your whole future here: backyard BBQs, Christmas mornings, maybe even a small dog with a big attitude.

You turn to your partner, wide-eyed. “This is it. This is our home.”

The REALTOR grins. “Amazing! Just send me your mortgage pre-approval and we’ll get the offer in tonight.”

Cue the sound of a record scratch.

“Pre-approval?” you ask, as if someone just said you need a passport to visit Manitoba. “We were going to do that after we found the right place.”

And just like that… the dream house slips away faster than a reasonably priced property in the Okanagan.

Let’s Be Real: You’re Not Alone

Too many would-be home buyers fall into this trap. You browse MLS like it’s Tinder, fall head-over-heels for a house, and then get crushed when it turns out your “dream budget” was more of a “daydream budget.”

Without a mortgage pre-approval, your offer isn’t really taken seriously. In competitive markets, sellers don’t want “maybe”—they want “money’s-ready, paperwork’s-done, let’s-close-this-deal.”

But We Used an Online Calculator…

You know what those calculators don’t do?

  • Factor in the stress test (yep, that still exists)

  • Account for your actual income, debts, or credit score

  • Consider CMHC insurance premiums if you’re putting less than 20% down

  • Recognize that your $10K line of credit for “emergencies” is actually maxed out from buying an e-bike last summer

Online calculators give you a ballpark. Mortgage brokers give you reality.

The Pre-Approval Process Isn’t That Scary

It takes a little paperwork (okay, a lot of paperwork) and a decent sense of humour when digging up your NOAs, pay stubs, and everything short of a blood sample. But it’s worth it.

You’ll learn:
✔️ What you can actually afford
✔️ How lenders view your financial profile
✔️ What your monthly payments will be
✔️ If you’re eligible for first-time homebuyer incentives or rebates (hint: maybe!)

The Happy Ending (Eventually)

So yes, that first dream home may have gone to someone who knew their numbers. But after a proper pre-approval, you’ll house hunt with confidence. No more guessing. No more heartbreak. Just smart, informed offers that have a fighting chance.

Even if the final destination is a one-bedroom condo over your local deli… it’s yours, and that’s a pretty sweet start.

Get pre-approved. Then fall in love.
Because unlike fairy tales, buying real estate requires paperwork, a plan, and probably a mortgage broker with a good sense of humour – trust me, this is essential.

Don’t leave your house buying to chance.  Just remember, it may take you months to find that “perfect” home, and when you do, we want to be prepared! We want to build confidence in the homebuying process so that you can concentrate on the more important things, like what to paint your bedroom or what type of fixtures you want in your kitchen!

Why Getting Pre-Approved is Essential to your Homebuying Journey

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Why Getting Pre-Approved is Like Packing for a Vacation (and Not Forgetting Your Passport)

Ah, homeownership! The dream of backyard BBQs, perfectly curated Pinterest décor, and the sweet satisfaction of never having to ask a landlord if you can hang up your 500-piece family photo collage. But before you start measuring the walls for that oversized sectional, let’s talk about the most crucial step in your homebuying adventure: getting pre-approved for a mortgage.

Think of it like planning a big trip. You wouldn’t book a flight to an exotic destination without making sure your passport isn’t expired, right? Well, buying a home without a mortgage pre-approval is a bit like showing up at the airport with nothing but a suitcase full of dreams and a driver’s license. It’s not going to end well.

Step 1: Verbal Income vs. Reality—A Special Message for the Self-Employed

Picture this: you confidently tell your mortgage broker that you make “around $100,000 a year.” Sounds great! You’re practically rolling in the money! But then we get to your actual documents, and… surprise! If you’re self-employed, there’s a good chance that the $100,000 you quoted was based on gross earnings—before expenses, write-offs, and some creative accounting that made sure Uncle Sam (or in our case, the CRA) didn’t take more than necessary. When we finally get to your net income, well, let’s just say it’s not at all what we were expecting.

Listen, we love optimism, but when it comes to mortgage pre-approvals, accuracy is the best policy. Your lender is going to check your documents anyway, so let’s make sure you’re looking at homes that truly align with your financial picture. A little preparation now means fewer surprises later—and a much smoother path to getting the keys to a home you’ll love.

Step 2: The Document Hunt – Like a Scavenger Hunt, But with Higher Stakes

Your mortgage broker will ask for documents like pay stubs, tax returns, bank statements, and maybe even a letter from your employer confirming you actually work there and aren’t just loitering around the breakroom for free coffee.

This is not the time to play hide-and-seek with your paperwork. The more complete your file, the faster (and less stressful) your approval process will be. You wouldn’t show up to airport security without your boarding pass, would you? Exactly. Hand over those documents like your homebuying future depends on it—because, well, it does. And just to clear the air—your mortgage broker isn’t some unruly dictator demanding endless paperwork for fun – trust me when I say this, this is the least liked part of the process. Every document request needs to be reviewed and verified.  That’s right…those 120 pages of Bank Statements we asked for (to confirm your down payment) must be reviewed in its entirety. Why? Federal Regulation demands that we confirm all large deposits due to anti-money laundering (AML) legislation. Thus, mortgage brokers are considered the middleman between you and the lender, trying to make sure you don’t get an unexpected “no” at the worst possible moment. Think of them as the friend who double-checks your packing list before you head to the airport—annoying in the moment, but a lifesaver when you realize you almost forgot your passport.

Step 3: Shopping Smart – Don’t Fall in Love with a House You Can’t Afford

We get it. You’ve found The One. It has the walk-in closet of your dreams, a kitchen that screams “I’m definitely learning to cook now,” and a backyard perfect for summer soirées. But hold on—if you haven’t been pre-approved, how do you know it’s actually within your budget? You don’t want to go through the emotional rollercoaster of mentally moving in, only to find out the bank says, “nice try.”

Getting pre-approved means you know exactly what price range to shop in, making the process smoother and more realistic. You wouldn’t try on a wedding dress before checking the price tag, right? Same rule applies to house hunting. The homebuying process is stressful enough—our job as mortgage brokers is to reduce any unexpected phone calls that could turn your happy “we got the house!” moment into an “uh-oh, we have a problem” moment. Trust us, we want your closing day to be full of celebration, not frantic last-minute paperwork!

The Moral of the Story? Be Prepared!

Pre-approval isn’t just a formality—it’s your golden ticket to the homebuying process. It saves you time, stress, and the embarrassment of having to call your realtor and say, “So, about that house I loved… turns out I can only afford a shed in someone else’s backyard.”

Let’s be real—the market is tough right now. Home prices aren’t exactly giving off “bargain bin” energy, and competition can be fierce. The last thing you want is to add unnecessary stress to an already challenging process. That’s where preparation comes in. By getting pre-approved and letting your mortgage broker steer the ship, you’re setting yourself up for success instead of disappointment. Think of us like your GPS for this journey—sure, you could wing it, but it’s a lot less painful if you follow the right route from the start.

So, future homeowner, take a deep breath, gather those documents, and work with your mortgage broker to get pre-approved before you start falling in love with listings. Trust me, it’ll make the whole process a lot smoother—and way less stressful. Now, go forth and house hunt responsibly! And remember, your Mortgage Broker should be your “best friend” during your homebuying experience.  They should be showing you their best communication skills and experience because buying a home should be one of the most exciting moments in your life.  The last thing any “good” broker should do is take a backseat approach to your homebuying experience.

 

The Silver Lining: How Potential U.S. Tariffs Could Present Opportunities in the Canadian Mortgage Market

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With speculation that the U.S. may impose new tariffs on Canadian goods, there’s been much discussion about the potential economic impact. While tariffs can introduce challenges, they can also create opportunities—particularly in the housing and mortgage markets. Rather than viewing this as a period of uncertainty, homebuyers can take advantage of shifting market conditions to make smart financial moves.

The Potential Economic Impact of U.S. Tariffs

Tariffs on Canadian exports—such as lumber, aluminum, steel, and agricultural products—may lead to price adjustments and shifts in business investment. However, these changes also open the door for domestic industries to thrive, potentially leading to job growth in certain sectors and opportunities in the housing market.

How the Canadian Mortgage Market Could Benefit

While tariffs might influence economic conditions, they also bring some potential positives to the mortgage landscape:

  1. Lower Interest Rates Could Be on the Horizon
    If tariffs slow economic growth, the Bank of Canada (BoC) may choose to keep interest rates low or even reduce them to stimulate spending. This could lead to more affordable mortgage rates, benefiting both first-time homebuyers and those looking to refinance.
  2. More Competitive Housing Prices
    A slight cooling in certain housing markets could result in more balanced pricing, giving buyers greater negotiating power. Those who have been waiting on the sidelines may find this an opportune time to enter the market with less competition and better deals.
  3. Increased Government Support for Homebuyers
    Historically, economic shifts have led to government initiatives aimed at supporting homebuyers. This could mean more incentives for first-time buyers, improved access to mortgage products, or policies designed to encourage homeownership and affordability.
  4. A Boost for Domestic Growth As certain industries adjust to new trade dynamics, Canada may see increased investment in local production and job creation. This can provide long-term economic stability, ultimately benefiting the housing sector and consumer confidence.

How Homebuyers Can Take Advantage

For those considering purchasing a home, here’s how you can use these shifts to your advantage:

  • Take Advantage of Low Rates: If interest rates remain stable or decrease, locking in a favorable mortgage rate can lead to long-term savings.
  • Explore New Market Opportunities: A changing real estate landscape means more opportunities for buyers who are flexible and prepared.
  • Benefit from Government Programs: Stay informed about potential policy changes designed to make homeownership more accessible.
  • Work with a Mortgage Broker: A knowledgeable professional can help navigate changing conditions and find the best financing options.

Final Thoughts

Rather than viewing potential U.S. tariffs as a cause for concern, this period presents unique opportunities for homebuyers and investors. The Canadian mortgage market is resilient, and with careful planning and a proactive approach, buyers can find themselves in a strong position to achieve their homeownership goals.

If you’re looking to make the most of these changes, reach out to a mortgage professional, such as myself, to explore your options and secure the best possible outcome for your financial future. The current geopolitical climate, although uncertain, can lead to opportunity.  This doesn’t mean one should not be mindful of the potential obstacles and challenges that lay ahead when it comes to your mortgage and home finances; but, we should be aware that there may be opportunity to.

Taking the lead can help to offset these challenges and keep you firmly planted in the driver’s seat.  Our primary goal for any client who reaches out is to review the current situation and anticipate future scenarios so that we can prepare our clients with options that are meaningful to their personal circumstances.

Kari Gares

Broker Owner

Verico Mortgage House – Kari Gares

Transform that Dated Home into Your Dream Home: A Buyers Guide to Home Buying

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So, you’ve found “that” home. You know the one – the charming yet slightly outdated gem with a kitchen straight out of the ’70s, pink bathroom fixtures that scream retro, and shag carpet that could use a serious update. At first glance, you might be tempted to run for the hills, but hold on a second! What if I told you that with a little creativity, a dash of humor, and a Purchase Plus Improvement Loan (PPI Loan), you could turn “that” home into your dream oasis? Yes, really!

Let’s face it – there’s something oddly charming about a home stuck in a time warp. Sure, the avocado-green appliances and floral wallpaper might not be everyone’s cup of tea, but instead of seeing them as drawbacks, why not embrace the retro vibes? With a PPI loan, you can transform outdated spaces into modern marvels while preserving a hint of nostalgia.

And those infamous pink bathroom fixtures – a relic of a bygone era. While some may see them as an eyesore, others recognize the potential for a stylish and unique space. Y you can bid farewell to the pink tiles and say hello to a spa-like oasis that’s as chic as it is inviting. Picture crisp white subway tiles, sleek fixtures, and luxurious accents.

A PPI loan can also help to “build” a basement suite for those who need a mortgage helper.  In some cases, we can use the proposed income from this “new” suite to make the mortgage more affordable; thus helping “would-be buyers” to qualify.  We all understand that with higher interest rates, affordability is a big concern.  And for some, making it difficult to enter the market. This creative solution may be the difference between buying a condo or a home.

So, how do you make this loan your secret weapon to transforming that dull, outdated ‘70s box-style home into your DREAM HOME?

This innovative financing option allows you to roll the cost of renovations into your mortgage, giving you the flexibility to customize your space without draining your savings. With one loan, you can purchase the home and fund the renovations, while enjoying the benefits of homeownership. There are limitations:

  1. Quotes are required to confirm the type of work.
  2. The buyer must do the work before funds are released.
  3. An Inspection before to support the “new” market value.
  4. An Inspection after to confirm work’s complete.

#1. Every Lender/Insurer will require quotes upfront.  Not only do the quotes confirm the type of work that is being done but they also confirm the value of the work.  Why is this so important you may ask? It is simple! The Lender will add the total cost of the work to be performed to the value of your purchase contract – effectively adjusting your lending value. Your down payment will be adjusted based on this new value. For example: You currently have an offer on a home for a purchase price of $500,000.  Your current down payment assuming 5% down will be $25,000.  Now, you decide to add approximately $50,000 (10% of the total purchase price) in home improvements. This effectively brings your new lending value to $550,000 with a new down payment of $30,000.  NOTE: any offer over $500,000 will require a down payment of 5% up to $500k and 10% on the balance.

#2. This part is EXTREMELY important: the lender and default insurer (CMHC) will demand that the work being proposed is the work that must be done. You cannot deviate from the proposed improvements. For Example: If you state you are upgrading your heating & cooling system but opt to do a bathroom reno instead then the lender will not advance the funds as originally approved in your application. Why is this so important? Simple, the lender/insurer approved the file based on specific conditions.  conditions that were supported by an inspection/appraisal to determine value. If you choose to do something different then this could undermine your application putting undue stress on your family.

#3. Appraisal Report before completion. As mentioned in #1, an appraisal is required to determine the “As is” value and the “as is complete” value. What does “as is” mean? The “as is” value is the value before any work is done. The appraiser needs to evaluate the home’s market value before any work is done.  Should the value come in lower than the offer then this could undermine your application. In most cases, the insurer will request this but there are the odd cases where the lender doesn’t require an appraisal upfront.  Additionally, the “as is complete” value represents the assumed lending or market value of the home when the reno project is complete. It would be assumed that every dollar spent would equate to a dollar gain in market/lending value but this is not always the case. This is why the insurer/lender will request this as it is their responsibility to ensure that the value is fully supported.

#4. Final Inspection Report when your project is done: This is the final step in what surely seems like a complicated application process. In all cases, a final inspection report is required by the original appraisal firm to validate the project completion (based on the quotes provided). This is the only way for a lender to ensure the investment/renovation cost is added to the overall value of the home.  If you remember from #2, the money cannot be released until the project is complete. The lender needs to confirm the work was done and the money invested into the property before they will release any funding.  So if you made the mistake of doing something different than quoted then the lender/insurer may withhold the funds entirely.

The criteria above may sound scary but understanding how the program works will prevent these unfortunate missteps from occurring. A purchase plus improvement loan has helped many clients find their perfect home – especially during a time of high market values.

Before you dismiss “that” home as a lost cause, consider the possibilities. With a PPI loan, you have the power to turn a dated dwelling into your dream home – one avocado-free kitchen, pink-free bathroom, and shag-free floor at a time. Embrace the possibilities, unleash your creativity, and get ready to fall in love with your own home.

Remember, the journey from “that” home to your dream home may not always be smooth sailing, but with a little humor and a lot of imagination, anything’s possible. So go ahead, make an offer, and get ready to transform “that” home into the stylish sanctuary you’ve always dreamed of.

 

Kari Gares

Mortgage Broker

Understanding and winning the credit crunch

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As we all slowly make our way out of the holiday season, I would like to take this opportunity to welcome you back to my blog series. In my last post, we provided steps in understanding some of the “partner-factors” in purchasing and closing on a new home close to the holidays. While there are many factors, the biggest personal factor that we did not touch on, is your personal finance credit.

So, what exactly is credit? Most of us see our credit as a tool for what we have available for financial use. This tool or availability of monies can be used to buy big-ticket items such as houses, cars, and help to assist in financing renovations or other necessities we might see fit.

How we define personal finance credit, in reality, might mean two different things to two different people and what their perspective is with regards to the credit tools they have available.

My definition is that personal finance credit is credit, either in the form of a loan or mortgage from a certified lender, that is used with the understanding of paying those monies back with future income earned over a set period of time, or amortization rate.

Why is this important compared to other forms of credit, such as a credit card or even a line of credit? The number one reason is that this part of your “Credit Portfolio” is susceptible to large increases or decreases of buying power while being the largest form of credit that you can use towards those large-scale purchases such as a house. With the housing market being as robust as it has been in 2020 if you’re looking to purchase in March of this year, it’s more important than ever to understand what can affect your personal finance credit and how you can fix it in a relatively short time. In some cases, in less than 90 days.

Credit Score:

I always advise my clients, that it is to their disadvantage to go into a new lending situation with a credit score of less than 680. With a credit score of less than 680, the amount of credit (Mortgage) a lender is willing to lend, could be upwards of $60,000. Why is that?

  • $60,000 is equivalent to four percent of your Gross Debt Service (GDS) over the lifetime of that loan.
  • Your pre-approval could take longer and is not necessarily guaranteed (Pre-approval, what does it really mean?) when looking to secure a house in a seller’s market this is less than ideal.

CMHC Stress Test:

The “Stress Test” was new to the mortgage world regulation, introduced by the Canadian Mortgage and Housing Corporation in 2018. It put in place requirements that insured mortgage lenders check that applicants will, if required, still be able to make payments based on higher qualifying rates. This stress test is done by calculating the Gross Debt Service (GDS) and the Total Debt Service (TDS) of a client. However, as mentioned in my previous blog post (Making sense of the unsensical), this could have a detrimental effect on individuals and households trying to move up to a larger home.

Credit Cards

One of the biggest misnomers for personal finance credit is that having a lower limit credit card will not affect your ability to get a mortgage from your lender. This is one of the mistakes that I regularly advise clients to move away from. One of the main reasons is that lower limit credit cards are typically overutilized as a credit instrument. What do I mean by that?

Example #1: Client A, with a $500 limit credit card, purchases only groceries on the card. They use the full amount of credit and pays off the balance monthly. However, when it came time to make create their application, their credit check showed as having a balance and overutilization of their credit.

Example #2: Client B, with a $3,000 limit credit card, purchases roughly $500 worth of groceries on their cards as well. They pay the balance off monthly as well. When they came to me to start their application, their credit check showed as having a balance; however, it also showed that their credit card as a credit instrument was under-utilized.

These are the big three that contribute, in most cases, to a less than ideal situation for lending. They can impact you the greatest when it comes to your purchasing power. So how do we fix this? Prior to my work in the Real Estate and Mortgage Brokerage industry, I helped clients navigate these challenges as a finance industry expert for a major institution in Canada, and below are my recommendations that can help you navigate these pitfalls.

Credit Cards:

  • I always advise my clients that you need to pay your balance off monthly, or at the time of the purchase. This will contribute to a better credit score and when making a new mortgage application will increase your chances of pre-approval.
  • If you have a lower limit card that is overutilized ($500 limit but is used fully), call your lender or credit card provider and ask them for a higher limit. **Disclaimer: While I’m not advocating for spending more on these cards, this strategy will allow you, along with paying off purchases quickly, to show that you are underutilizing your credit cards as a credit instrument. In the short and long term, this will allow you to increase your buying power on numerous fronts: House, car, vacation property, etc. while allowing you to increase your credit score.

Credit Score:

  • If your score is less than 680 there are two ways to increase that score in as little as 90 days to six months.
  • If you regularly go to a gym or have a regular payment with a company (Cable or Cell Phone) that charges no interest on monthly payments, sign up for a monthly payment plan. This can help to impact your score positively, in some cases increasing your credit score by 100pts in 90 – 120 days.
  • If you have student loans that are still in the process of being paid off, make sure those payments are made on time
  • Lastly, the big one that has come up with past clients, if you’re looking to finance a new or new to you car within the same time that you are looking to apply for a new mortgage or renewal, WAIT! In almost all cases, this purchase will drive up your Total Debt Service (TDS) and will negatively impact the applications. However, having a mortgage that is serviceable and at a lower TDS will allow you to get that car in the future. We will touch on that in a future blog spot!

CMHC Stress Test:

  • First check to see if your lender or bank works with the two other insurance lenders in Canada, Genworth Canada, or Canada Guaranty. They have slightly different qualification requirements, as well as not having imposed the restrictions on new lending. This might allow you more room to maneuver throughout the application process.
  • Ensure that your TDS is lower than 42%, which includes your current mortgage, credit cards, and any payments being made to service your debt. This will provide you with the ability to have more buying power in a 2020 market that has been bullish.

As we move forward with 2021, thankfully and with a positive outlook, if there is one thing I can say it is that I will ABSOLUTELY continue to support you and provide the best possible advice, whether you are looking to purchase a new home or renew your existing mortgage. Let’s hope that 2021 can ring a little brighter for all of us.

Visit us virtually and let me help you navigate your journey through the process at Karigares.com.

All the best and Happy New Year.

Kari

Holiday Home Purchase – What to expect during the holidays

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In our household as well as others around the Okanagan and Canada, the holidays are a time that are filled with family, relaxation, and festive spirit. For some, like our family this year, it is a time where big decisions have already been made and new roots are about to be put down.

In 2019, stats can reported that 45,000 families made the decision to purchase a home at the end of November with the potential for closing the deal and being moved in by the end of December or by Christmas. In most cases, these purchases went the way they were planned, smooth and without issue. However, in some instances, buyers encountered a big surprise in how the market works during the holiday season, with some of the issues not being so merry.

Through my fifteen years of experience, I’ve helped numerous clients during this unique time of year and if you are deciding that a December closing on your new home is the time for you, the main question I always ask my clients to consider is:

“Do we have our Real Estate team and professionals, [Real Estate Agent, Legal (Solicitor or Conveyancer), Mortgage Broker and Finance (Bank)], in place and what are our expectations of all involved?”

Once you have that questioned resolved, it is good to understand the following issues that might delay or impede the process to meet your expectations.

Time:

Are we giving ourselves enough time?

Very much like buying and sending off gifts, time is the biggest factor and touches every aspect of the process and even more so during the holidays. Typically, the closing of a home from the time a signed offer is agreed to, to the time of broker completion is 45 days. This timeframe is condensed even more during the holidays, with roughly only 18 working days from the start of December to do what you normally are completing in 45 days. If you start the process late, you might not be ready to move in till early to mid January.

COVID-19 and Finance

The big elephant in a small room. COVID-19 is here for the foreseeable future and we advise our clients that it is affecting the finance world in different ways. The biggest being it’s started to create inefficiencies that a year ago we never saw.

The major issue we deal with now is the loss of the “office advantage”. Previously, all parts of the finance team where closely knit, with the junior underwriters and credit teams sitting in close proximity to each other. This helped to resolve any financing issues around the purchase of a home as they arose. How does this affect me you might ask? Today, most or all these employees work from home and are communicating either by email, phone, text or in some cases having to schedule Zoom meetings to review documents. It’s not always fluid and we’ve seen this process go from one or two days to adding an additional two to three extra days worth of time (Oh, the sneaky time factor again).

With this change in the process we advise our clients that making sense of the finance rules, some of which are new and some which continue to evolve, (The New Stress Test) as well as understanding your credit are ways we can help you lessen the time spent dealing with your bank.

Legal Team – Notary or Solicitor

What is the best option for us and when are they available, if at all over the holidays?

During a typical year, your legal representation whether that is a solicitor, or a notary is open, depending on the firm, Monday to Friday, 9 a.m. to 5 p.m. So roughly give or take, about twenty days during any given month. However, over the holidays, this can change. In most cases both have reduced hours and during December that can shorten your window to roughly 15 days. Why? Most solicitors and notaries are closed a few days prior to Christmas day and thru to New Years day. If for some reason, they must have employees come in and have documents signed during these days off, it could and usually is an added expense to the final closing costs.

The second thing to keep in mind is whether you feel the transaction is straight forward enough for a conveyancer or requires a little more expertise of a solicitor due to some legal issues surrounding the property, such as taxes or potential issues with a previous spouse. This is important because if for some reason a notary is not able to resolve some issues, they ultimately will send you to a solicitor, which again, will add time and money to the equation.

Your expectations:

Your expectations are sometimes the greatest challenge you will face during this process. My best advice to clients is that they should be giving themselves reasonable timelines and really understanding the issues noted above. Understanding these issues, allows the seller, the mortgage broker and the rest of the professional team to make strong decisions that are fact based. This can help the purchasing process move smoothly and create reasonable expectations within a client’s real estate team that make sense for all involved. In this we can help you avoid any potential disappointment or delays that might arise.

This December, whether you are purchasing a new home or seeking advice on the process, we hope that you are building on traditions and memories and as always, we are here to help you grow new roots.

From my family to yours during this holiday season.

Kari

Vacation Properties EP#6 Mortgage Mechanics

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Welcome to another episode of Mortgage Mechanics.

We’re here in the beautiful ski Resort of Silver Star Mountain on opening day where the powder is fresh and the air is clear. Have you ever wanted to own your own vacation home but didn’t know where to start?

Owning a vacation home is a dream for many. Whether it is up at the local ski hill, golf course, or lake resort, there are financing policies that can change how you finance your dream vacation home.

If you are a Canadian buyer, you do have a few more options than our International buyers. For one, you have the ability to purchase with a minimum of 5% down under Genworth’s secondary home policy. This allows potential buyers the option of buying without having to put 20% plus down.

There are conditions with this rule – you cannot have another mortgage that is high ratio insured with the same insurer. If you do, then you will be restricted to 20%. And you must be able to qualify without the use of rental income. If you are looking for a vacation rental, then your down payment increases from 5 to 20-25%

If you are an international buyer, your finance options are more restrictive.

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Most lenders require a minimum of 35% but depending on your situation we could potentially secure 25%. You also have to be present to sign all legal documents in the presence of a CdN Lawyer and you MUST open a Canadian Bank account. There is no exception to this rule.

It is also important to note that not all vacation properties are financeable. Properties that are age restricted, fractional interests, hotel style condos, and mandatory rental pools are less marketable for a lender. If you are thinking of purchasing this type of property, we do encourage you to seek the advice of a knowledgeable vacation specialist who can provide guidance with the process.

Owning a prime investment such as a recreational property is not for everyone. Taxes are typically higher and you normally have strata or maintenance fees. It’s important to calculate your overall monthly expenses before making this leap. If all these factors have been considered, then your next step is to decide where and what type of property suits your lifestyle.

Whether it’s relaxing by a beach or sipping a hot chocolate by the fire, these aren’t dreams for the select few. Let us help you make your dreams of home ownership a vivid reality.

For more information on vacation properties and how to finance them, check out our blog at karigares.com

What is a Mortgage Broker?

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It’s one of those times in everyone’s career where they ask themselves, “Why am I doing what I’m doing? Does anyone appreciate or understand my role and why it’s important to them?”

I don’t think anyone is really immune to these feelings of self-worth and acceptance. We all try to offer something of substance to our clientele. Something that speaks volumes to our role in our respective fields and Mortgage Brokering is no different. Sure, there are some that may say your job is easy. You get paid well so don’t question how people think or what they think for that matter. Just go about your job as the rest is irrelevant.

Well, these statements may be true for some but for many in the Mortgage Brokering field, we do take acception to these statements. Our job is not glamorous.   Many make average incomes but spend many hours trying to do so. We struggle with the stress of handling one of the largest financial transactions for the majority of Canadians. We are the frontline to ensuring these transactions happen. If there are glitches, we need to fix them. If our clients are stressed and feeling overwhelmed, we are there to help them. We handle many situations that are from both spectrums: from the happy 1st time buyer who is just starting out in life to those families that are divided; from businesses being born to businesses being shattered; to clients celebrating a raise or the birth of child where expansion is needed, to clients downsizing as their children are starting life’s of their own. We don’t simple do just mortgages. As you can see, our role is expansive. We are the hand that is there to hold you thru anything. Granted, not all brokers fit this bill but many do. So, I ask the question: “What does a Mortgage Broker do”?

On general terms, a Mortgage Broker is there to provide guidance, experience, knowledge and is there to provide recommendations to their clients regarding their mortgage transaction. We help to facilitate the mortgage approval by gathering information that is pertinent to the transaction. The basic information is how much do you make? And how much do you want to put down on your property purchase? And, are you looking for the best rate? Easy questions, right? Anyone can do this?

Well, if mortgage brokers only asked these very few and very simple questions we would not be able to provide the client with a proper plan that takes into account much more. Our role is to gather as much information about them now and about where they plan to be in the future so we can determine the “best” plan that meets their individual needs. These needs are more than term and rate? We need to ask as many questions as possible so that we truly understand our client and their needs. I do not want to be a glorified paper pusher that has no care for their client or for their financial well-being. Now, this leads us to a better understanding as to why there is so much confusion around what we do.

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The Banks have done a great job of spelling myths about our role. That we are the opposite to those things. Use a Bank because brand matters. Trust in what you know – trust in a logo hanging on the door, in a window and on a sign. That is the Bank’s motto. The ironic part of this statement is that Brokers provide close to 35% of the overall market share to the Bank’s business.

We also get to negotiate the best rate based on the client upfront. Have you ever wondered why a Bank offers one rate, a Broker offers another, and the original Bank then matches the broker’s rate? Is it odd to you that the Bank puts the onus on the client to demand better; whereas a Broker demands better upfront! We believe that every client should not have to worry about the negotiating side of the mortgage process. That is what we get paid for. Our primary goal is to facilitate the mortgage, build a long lasting client relationship so that we can guarantee future income by supporting those that make us successful – ie., a working wage to support our family! We have a direct interest in that transaction because that transaction comes down to the client. I worked for a Bank for many years. They too serve a purpose and that purpose is to make money for their shareholders while simultaneously building brand recognition. It is this Brand Recognition that brings clients thru their door and it is the same brand recognition that makes people believe they are being offered the best because loyalty must count for something.   It does and they will but you have to work extra hard to get it. A broker works harder to secure it in a faster and more productive way. So yes, on average, Brokers have the ability to secure better rates based on a specific product that is specific to the client and their needs; and the clients get to spend more time doing what they need to do which is work, raise a family, pick out new paint colours, or whatever is important to them. Brokers help you save time so you can spend more time doing the things that matter to you.

There is also a huge misnomer circulating out there that Brokers will cost you more with their astronomical fees and hidden agendas. We do laugh often at this statement but the reality is this inaccuracy was placed out there as a means to discredit us. It’s like a court case – reasonable doubt will prove your innocence. Reasonable speculation about costs will surely help those set on discrediting us win. In reality, very few deals have Broker fees attached. Those that do typically do not fit the “standard” mortgage financing policies. They could be self employed individuals that do not claim an income. They could be someone who has gone through financial upheaval in the form of Bankruptcies or foreclosures. It could be a business transaction or a private deal where we do not get paid direct by the institution that funds the mortgage. The ONLY time we charge is when we do not earn an income from the source (Lender), and more time than not the client is disclosed this fact upfront. Lawyers get paid for their time and energy. Realtors get paid for their time and energy. Even appraisers and home inspectors get paid for their time and energy; but why is it believed that Mortgage Brokers should be different. We work long days and sometimes long nights. We don’t take holidays because our clients need us.

We truly work 365 days out the year. We care beyond measure about what happens in our client’s lives. We have laughed with many. We have cried with many. We given hugs and comfort because sometimes that’s all we can do. We are not the Banks! We are people, humans dedicated to the well-being of every one of our clients. We strive for success but success isn’t always measured by how much we have but rather by how many we have helped.

I am Kari Gares, and am proud to be called a Mortgage Broker