Back to School: Credit Clean Up!

Personal Finance Vien Mountryvong 28 Sep

Published by DLC Marketing Team

Back to School: Credit Clean Up!

It’s time to go back to school… for your finances! The fall is the perfect time for a credit clean-up so that you are ready for the holiday spending season – and anything else the year can throw at you!

When it comes to cleaning up credit, there is no better time than now to recognize the importance of your credit score and check if you are on track with your habits. To get started with your credit clean-up, there are a few things you can do:

  1. Pull Your Credit Report: For most of us, our credit score is something we only think about when we need it. However, if you are unsure of where you stand, this is a great time to find out! The Fair Credit Reporting Act lets you get one free credit report every year through Equifax or TransUnion. Pulling your own credit report results in a “soft” inquiry on your report and will not affect your credit score. Click here to get your free credit report today!
  2. If You Find Errors, Dispute Them: When doing your annual credit score review, it is a good idea to go through line-by-line and confirm no errors. If you find any errors, report and dispute them immediately as they could be affecting your score.
  3. Consolidate Your Loans: One of the best tips for managing your credit and working towards future financial success, is to consolidate your debt. Consolidating debt means reducing multiple loans to a single monthly payment, which typically has a lower interest rate allowing you to maximize spend on the principal amount.

Once you have put the effort into cleaning up your credit, you will want to keep it that way! A few tips for maintaining your credit and maximizing your financial future include:

  1. Pay Your Bills: This seems pretty straight forward, but it is not that simple. You not only have to pay the bills, but you have to do so in full AND on time whenever possible.  Paying bills on time is one of the key behaviours lenders and creditors look for when deciding to grant you a loan or mortgage. If you are unable to afford the full amount, a good tip is to at least pay the minimum required as shown on your monthly statement to prevent any flags on your account.
  2. Pay Your Debts: Whether you have credit card debt, a car loan, line of credit or a mortgage, the goal should be to pay your debt off as quickly as possible. To make the most impact, start by paying the lowest debt items first and then work towards the larger amounts. By removing the low debt items, you also remove the interest payments on those loans which frees up money that can be put towards paying off larger items.
  3. Stay Within Your Limit: This is key when it comes to managing debt and maintaining a good credit score. Using all or most of your available credit is not advised. Your goal should be to use 30% or less of your available credit. For instance, if you have a limit of $1000 on your credit card, you should never go over $700.


NOTE: If you find you need more credit, it is better to increase the limit versus utilizing more than 70% of what is available each month.

Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor). If you are ready to start your home-buying journey, or are looking to refinance your existing mortgage, a DLC Mortgage Expert can help you review your credit score and financial information to help you get the most from your money.

Advice for Single Homebuyers

Mortgage Tips Vien Mountryvong 28 Sep

Published by DLC Marketing Team

Advice for Single Homebuyers.

Buying a home is an exciting experience for anyone, and even more of a milestone when you’re doing it solo, but it can be a little different when you’re purchasing on your own. While it can be easier to tailor your mortgage and home search to exactly your needs, it can be somewhat more stressful handling the purchase of a home on your own… fortunately, that’s where a Dominion Lending Centres mortgage expert can help! They assist with your mortgage application, pre-approvals and final financing to make the entire mortgage process much smoother.

In addition to using a mortgage expert and having a trusted realtor, here are some other tips that can help improve your homebuying experience:

1. Be Aware of Your Financial History

Understanding your credit score and your financial history can help to improve your qualification potential. If your credit score is a little lower than it should be, or lower than you’d like for what you are trying to qualify for, you can take steps to improve this prior to seeking a mortgage and get better results.

2. Ramp Up Your Savings

Of course, while a mortgage will cover a large chunk of your home purchase, you are also required to have a down payment. In addition, you need to consider closing costs (1.5-4%) of the purchase price, as well as ongoing maintenance and costs for your new home (repairs, utilities, property taxes). It is important to determine your budget so you are aware of what you can afford monthly.  BUT before you shop is also a great time to start ramping up your savings account so you can put more down and potentially reduce the overall mortgage.

3. Study The Marketplace

One of the most important aspects of homeownership is understanding what you can afford and where you want to live. These two key components can help you to determine your budget and the areas that you should be looking for a home, as well as what type of home size, amenities, etc. Understanding what is available can provide you with more information and help you fine-tune your shopping list.

4. Be Flexible When Possible and Firm When Not

While shopping for a home on your own can be much easier as you’re only concerned about your own needs, it is still important to be flexible. While it is easier to find a home that fits just ‘you’, keeping your options open can also have its benefits. Of course, if there are things you cannot live without or a location you really need to be in, it’s important to be firm about those things as well. Creating a list of wants and needs can help you determine where there is room to be flexible, and where there isn’t.

5. Consider Your Present and Future Needs

While you’re shopping for your new home for you today, you will also want to consider what your life might look like in the future. What are you doing 5 years from now? 10 years? Do you want to start a family or have children? Do you plan on changing jobs or perhaps requiring a move in a few years? All these things are important to be aware of so you can make the best choice for you today, but also ensure that you are considering your future needs.

6. Protect Yourself

Lastly, while you might not be purchasing your current home with a partner, it is important to leave room for this in the future to ensure that you and your home are protected. If you have another individual move into your home down the line, you could become common-law and that could cause complications. Having an honest conversation about expectations and responsibilities can help, as well as writing up a document for both parties to sign, indicating these responsibilities as well as outlining the investment made by the original owner and new partner.

If you are a single homeowner looking to make a purchase, but are not sure where to start, don’t hesitate to reach out to a Dominion Lending Centres mortgage expert. As an expert in mortgages, they have experience in all types of situations and purchases and the knowledge to walk you through the process and ensure you get the best home and mortgage for YOU.

Construction and Pre-Construction Mortgages

Mortgage Tips Vien Mountryvong 28 Sep

Published by DLC Marketing Team

Construction and Pre-Construction Mortgages.

Building or renovating your own home is such an exciting time and allows you to create something tailored to you and your family!  But when it comes to construction mortgages, there are a few different types of loans: new construction and even pre-construction.  Let’s break it down so you can determine the best choices for you.

Construction Mortgage

Construction mortgages service both new builds and large home renovations. The purpose of a construction mortgage is to advance you the full funds for your mortgage in stages as outlined below.

These stages align with the construction process of your home (or through major renovations if you are doing an upgrade) and inspectors are required at each stage to confirm the current construction and allow for advancement of the next set of funds.

Draw Stage Required Completion Construction Stage % of Total Mortgage Advanced
1st Draw (Optional) 15% complete Excavation and foundation complete. You can also use this first draw to purchase land. 15%
2nd Draw 40% complete Roof is on, the building is weather-protected (i.e. airtight, access secured) 25%
3rd Draw 65% complete Plumbing and wiring is started, plaster/ drywall is complete, furnace installed, exterior wall cladding complete, etc. 25%
4th Draw 85% complete Kitchen cupboards installed, bathroom completed, doors have been hung, etc. 20%
5th Draw 100% complete Ready for occupancy with seasonal and exterior work completed 15%

In addition to the difference in receiving funds from a construction mortgage versus a traditional mortgage, there are a few other key differences:

  1. Home construction loans are short-term agreements with generally one-year in length while mortgages have varying terms and range anywhere from 5 to 30 years in length.
  2. Most construction loans will not penalize you for early repayment of the balance, unlike traditional mortgages which can have pre-payment penalties if not part of your agreement.
  3. Monthly payments are interest-only until the end of construction.
  4. Construction loans only charge interest on the amount of the loan used during the construction. The borrower does not have to pay interest on any unused portions. Traditional mortgages require the borrower pays interest on the entire amount of the loan.
  5. Construction loans can provide upfront funds to purchase land for your build, while traditional mortgages typically do not service land-only purchases.
  6. Any remaining costs of construction can be paid down by acquiring a mortgage on the home once it’s completed.

Note: If you are choosing to do a self-build, you will need to prove that you have enough experience to properly handle the construction from start to finish.

Keep in mind that, similar to traditional mortgages, construction loans have varying rates and terms depending on the type of property you’re building, the amount of construction and length of the construction.

Pre-Construction Mortgage

Somewhat different from a construction mortgage is a “pre-construction” mortgage. These typically apply to condominiums, townhouses and other new builds. When it comes to pre-construction condo purchases, mortgage approval is required as this tells the developer that you have the ability to finalize on the unit later.

Typically, mortgage pre-approval is required within 30-90 days of purchase but you can get mortgages as early as 2-3 years from when the project is due to be completed. In these cases, you may not necessarily be able to get a rate guarantee due to the timeframe but it is worth asking for a commitment letter if you’re seeking a mortgage closer to the final build.

Similarly with traditional mortgages, your ability to get approval for a pre-construction mortgage is determined by your credit score, income-to-debt ratio and your employment history.

Closing happens once the building has been registered and when you receive the title to your unit. However, with a pre-construction mortgage, your payments will start with the builder occupancy fees from the time of occupancy to final closing, which can be a period of 3-6 months depending on the project.

If you are looking to purchase a new build or are interesting in building your own home or renovating your current one, please be sure to reach out to your Dominion Lending Centres mortgage expert and discuss your options to ensure you’re getting the best construction loan for your project.