How to Map Out a Property Investment Plan

How to Map Out a Property Investment Plan

When you’re poring over those New Year’s resolutions for 2013, a good property investment plan is something you might want to consider putting down on paper.

The start of the year is the perfect time to consider such a plan.

In the plan, you should map out your financial goals, determine what your net worth will be at the end of 2013 and figure out how much money you’ll need in order to retire.

Your goals may be weekly, monthly or for any period you like.

It’s also important to decide what to do when you achieve your goals and what to do if you don’t.

For example, if you purchase that property you were after, celebrate it.

If something happens and you don’t end up purchasing it, decide what you’ll do then.

It could be re-evaluating your goals, finding a new property or deciding on a new strategy.

Consider setting out a schedule to achieve those goals over the next three years, five years, seven years and 10 years.

Remember that your plan is dynamic, meaning it can and will change as your priorities change and because some of your investments may not work out the way you planned.

Look at the different investment strategies available to you and understand the types of properties you need to purchase, and then complete a cash-flow projection.

Any good real estate investment plan has a cash-flow analysis.

You’ll also have to decide on an exit strategy – when and how to liquidate your portfolio to get the maximum benefit from your investments.

Use the services of a good tax accountant, a good lawyer, a good mortgage broker and a good real estate agent.  They are all available to help you achieve success.

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).



Is an Equity Take-Out the Right Option for You?

Is an Equity Take-Out the Right Option for You?

If you’ve been a homeowner for many years, you may have substantial equity in your home.  While being in an “equity rich” position is nice, it may not always be the best use of your money. This is where an “equity takeout” mortgage can be very useful.  Simply put, an equity takeout is taking out the money you own in your property. It’s the value of your home less the amount of mortgage registered against it.

For example, if your home is worth $200,000 and you owe $100,000 on your mortgage, the equity, or the amount you own, is $100,000. Usually your property value will increase over time, which increases the amount you own.

An equity takeout can be used for different purposes, including:

  • Debt consolidation
  • Home improvements
  • Buying other properties
  • Purchasing other investments such as stocks or RRSPs
  • A child’s education

Once you’ve tapped into your equity, which can be up to 80% of the total value of the home, depending on your financial situation, the principal on the value of the home will increase.

For example, the principal on a property valued at $200,000 with a mortgage of $100,000 pre-equity takeout, will increase by the amount you decide to take out. If you opt for the entire 80%, you will now owe $160,000.

You can access your equity in a few forms: a fixed-rate mortgage, a variable-rate mortgage or a line of credit. Fixed and variable rates lock your mortgage into a term. The line of credit is more flexible, and the initial amount can be reused as you pay it down.

An equity takeout may not always be the best solution to your particular situation. Consider consulting with your mortgage professional. He or she can show you the various options and what the costs will be.

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


How to Save Your Home in Times of Trouble

How to Save Your Home in Times of Trouble

It sometimes happens – a layoff, a job loss, an extended illness or just too much debt.

You can manage only minimum payments on credit cards, and you’re having trouble coming up with the mortgage payments on your home.

You hope that everything will work out, so you don’t do anything except wait it out.

When you fall behind on mortgage payments, though, it’s time to get proactive and start communicating.

The first thing to do is talk to your mortgage professional, who can advise you of your options.

Lenders are willing to work with homeowners to help them keep their homes and default insurers, for those who have high-ratio mortgages, offer a variety of programs to help prevent foreclosures.

Start by taking a good look at your income and expenses and put together a budget. This will give you a good snapshot of where you are financially. There are organizations that offer credit counseling and can help with preparing a budget.

Then look at ways to boost your income – a second job, selling household items or renting a room.

Following are some steps you can take:

Talk to Your Lender: They truly want to help you because it’s costly for them to start any foreclosure proceedings. They may lower your payments for a time or add the missing payments to the end of the loan.

Refinance: If you still have equity in your home and your credit hasn’t been damaged yet, you can still refinance.

Know When to Let Go: It may be impossible to hold on to your home.
And sometimes it’s best to let it go, take what equity you can and start again. This is when you need the help of a real estate agent who can set a realistic selling price so your home will sell in a timely manner.

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


9 Keys to Getting Your Mortgage Approved

9 Keys to Getting Your Mortgage Approved

For some buyers, getting financed can be tough slogging.  It’s even more difficult if you’re self-employed.  Working with an expert to navigate the application and fulfilment process is a must. An expert can help you with things that you didn’t even know would come into play.

Following are nine ways buyers can maximize their chances of getting a mortgage:

  • Disclose all the properties you own. You have to tell your mortgage professional about all the properties you own and the mortgages on them. 
  • Keep your taxes up to date. Lenders may decline your application if you owe taxes to Revenue Canada.  
  • Communicate your reason for purchasing. Showing that you know what you’re doing will make it easier to get the financing required.
  • Make sure your property meets minimum requirements. Each lender has different guidelines.
  • Show where the down payment funds are coming from. This is critical. Lenders want to know that the deposit is liquid and accessible.
  • At the time of application, keep your current financial situation stable. For the best rates, all income needs to be verifiable.
  • Be conservative with the value of a property.
  • Don’t look for the lender with the cheapest interest rate and then try to fit the lender’s policy. A mortgage professional can help you plan your financing and structure your loan with the features you need.
  • Use a mortgage professional. The paperwork that lenders require can be significant, and it’s important to get it right.
Have a great Thanksgiving everyone!
Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


Five Things That Mortgage Lenders Look For…

Five Things That Mortgage Lenders Look For…

When lenders like banks and credit unions are assessing your ability to qualify for a mortgage, they will look at two factors.

First, they want to make sure you have the ability to make the mortgage payments.

Second, they want to measure your willingness to make the mortgage payments.

These two factors are categorized and are simply known as the Five Cs of Credit.

The Five Cs are capacity, capital, character, collateral and credit.

Following is a brief explanation of each of the Five Cs:


Are you able to repay the loan? This is the most critical of the Five Cs. Lenders assess your capacity by reviewing your debt and payment history, something usually found on your credit report.


This is the amount of money that you have to invest in the property yourself. A lender likes to share some of the financial risk with the borrower. Under some circumstances, a lender will grant a loan with little or no capital if there is exceptional strength in the other four Cs.


This is a grey area. It’s an impression of how trustworthy you are to repay the mortgage. Lenders look at your length of employment to establish how secure you are, and they will look at your ability to save and to manage your credit as keys to your character.


This is a guarantee in the form of security for the loan. In the case of a mortgage, it’s the property itself. Collateral can also come from a third party who will guarantee the loan.


This is your credit history. This is essentially the only way a lender can predict your willingness to make future payments.


Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


Simple Steps to Clear Your Mortgage Debt Faster

Simple Steps to Clear Your Mortgage Debt Faster

A mortgage is likely your largest expense, so it makes a lot of sense to free up money by paying it off if you can.

Following are some easy ways to help you clear your mortgage debt a lot sooner:

  • Make a pre-payment each month. Get a copy of your loan amortization schedule or go to an online calculator.
  • Plug in some numbers, including an extra payment, to see how much you will save.
  • If you’re going to pre-pay, do it early in the mortgage. The interest on mortgages is heaviest at the beginning, so getting that down in the early years is a good strategy.
  • Make an annual lump sum payment. Most mortgages have an annual pre-pay option, which can be up to 20% of the principal.
  • Pay bi-weekly and add an extra payment each month.
  • Stay on top of mortgage rates. You might be able to refinance at a lower rate while still maintaining the same payment, thereby reducing the principal more quickly.
  • If you plan on moving, it’s probably not a good idea to pay off your mortgage. Put that extra money into a higher-yielding financial product like a mutual fund.

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


Do You Need Mortgage Protection Insurance?

Do You Need Mortgage Protection Insurance?

When you buy a home, it’s wise to have some type of protection in place to cover your mortgage in the event the main income earner dies or becomes disabled. Mortgage protection insurance is one such option.

Keep in mind that this is different from the default insurance you pay if your down payment was less than 20% of the purchase price of your home. Default insurance ensures that the lender is repaid in the event of a default on the loan.

It’s important to have mortgage protection insurance, because it shields you in the event you cannot make payments due to an unforeseen event like the death of a main income earner.

If you have mortgage protection insurance, the payments would still be made for you.

In some cases, homeowners will have enough resources, either in savings or investments, to guard against such calamities, but many don’t. If you have a life insurance policy, for example, it might be earmarked for the protection of your family. This is where mortgage protection insurance can be beneficial. Since your home is your largest single investment, it makes sense to protect it. Following are some facts that highlight the importance of proper protection:

  • 44% of mortgage protection claims happen in the first two years of the mortgage.
  • 11% of Canadians suffer some form of disability.
  • 43% of those disabilities are severe or very severe.

Make sure you do all your homework. Some plans allow you to cancel at any time or even refund all your premiums if you find a better option. Others offer a 60-day guarantee period.

And make sure to compare the costs of a mortgage protection plan to a term insurance policy.

Some protection plans are more cost-effective and offer better options than term insurance.


Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


How to Figure Out Mortgage Payout Penalties

How to Figure Out Mortgage Payout Penalties

If you’re selling a home and have a mortgage that isn’t portable, you need to understand how mortgage penalties are calculated.

For example, if you’re only two years into a five-year fixed mortgage and you’re buying a new home but don’t have that portable mortgage, most lenders will charge you an early-payout penalty. The penalty will be outlined in your mortgage documents.

Most Common Penalty

The most common penalty is the greater of three months’ interest or the interest rate differential.  This means that whichever amount is the larger of these two figures will be your penalty.

Three Months’ Interest Penalty

If you are paying off your mortgage before the maturity date, most lenders charge the three months’ interest penalty, which is calculated by taking the mortgage balance, multiplying by the annual interest rate and dividing by four.

Interest Rate Differential

The interest rate differential usually means the difference between the interest rate on the current mortgage compared to the rate at which the lender can relend the money.


For example, if the mortgage has a balance of $125,000 at 6.25%, and there are two years left to go and the current two-year mortgage rate is 3.25%, the lender will probably charge $125,000 x 24 months x 3% (6.25 – 3.25) /12 = $7,500.  Some lenders might lower this amount because the entire interest payment is being paid immediately rather than being extended over the longer term.

Low Rates

When interest rates are low, and you are looking at debt consolidation or moving home, then it might be to your advantage to pay the penalty on the current mortgage and get into a new mortgage with a better rate.  Such a move can save you thousands of dollars in interest.

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


How the Line of Credit Rules Affect You

Thinking about sprucing up the homestead?

The usual way to finance improvements to your home is to borrow against the equity in the property. This is done via a home equity line of credit (HELOC). The loan uses your house as collateral and allows you to borrow up to a predetermined amount at a much lower interest rate.  However, as some of you may remember the government announced over a year ago, that it would no longer insure these loans, requiring banks to assume the full risk of lending.  This is when the requirement came in that you could not exceed 80% LTV (Loan to Value) of your home. The OSFI (Office of Superintendent of Financial institutions) made a new announcement in June that the 80% was going to be reduced to 65% LTV (Loan to Value).  The dead line for all federally regulated banks is by the end of their fiscal year, in most cases this is October 31st, 2012…  However, we have already started to see some banks implement these changes…

This shift will have an impact on many Canadian households, because lenders will be more stringent in their money lending practices. Without the availability of using the government-backed HELOC option, many homeowners will have to use money from their savings, obtain an unsecured line of credit with a higher interest rate or postpone the project altogether.

HELOCs have become popular over the past 10 years, and their growth has outpaced mortgage debt.  However, because the money is easy to access, many consumers use the loans as their own bottomless piggy bank.  It’s these homeowners the government is trying to reign in.  And it makes sense because, in the long run, the result will be less household debt and healthier balance sheets.

For homeowners who use their line of credits as a safety net, or use them sparingly and know they can pay them back within a reasonable time, the new rules won’t have an impact.  For others, it will help curb chronic debt accumulation and put them in a better financial position. HELOCs are still available and interest rates vary…

Have a great long weekend everyone!

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).



Facing divorce. . .Should I sell the house now?

 If you believe that we are facing a “real estate bubble” ,  the decision of what to do with your home   is  challenging.. sell now and wait to buy if/when prices go down?

 What does that mean to you if you’re someone facing divorce today?  Should you consider selling quickly to take advantage of the market now?  Some people believe they should sell now and split the money and each buy something  on you own before prices climb even further.  

Many couples  have to make  tough decisions  about their home sometimes before they have a final separation agreement in place.

Many people are carrying large debt loads and are shocked to see how much they in fact have left over  after paying off all their debts.  In calculating the cost of a new home, you must take into account such things as legal fees, moving costs, utility set up fees,  condo fees, etc

The big expense that buyers overlook, however,  is land transfer tax.  And if you  considering buying in the GTA, there is an additional land transfer tax assessed.  Most realtors and mortgage brokers websites have a land transfer tax calculator. If you can’t  locate one easily, let me know and I’ll do the  calculation for you.

For most couples, the marital home is your  largest asset. You may want to look at all your options and get  financial advice before moving on!