14 Feb

Invest in RRSP’s or pay down your mortgage? Which one is better for you?

Abbotsford Mortgage

Posted by: Matt Robinson

The decision may not be as hard as you may think. A balanced approach to both investing and debt reduction may provide you with the best
results.

The investing world uses dollar-cost averaging. In the mortgage world we use mortgage payment optimization to achieve the same effect. Reach out to me, and we can automate additional principal payments to your mortgage and knock years off your amortization, Which will save you thousands of dollars in interest.

RRSP season is here. Should you be contributing?

(Special) – The banks are very busy these days with Canadians lining up to make their annual Registered Retirement Savings Plan (RRSP) contributions. While contributing to your RRSP for retirement generally is a good idea it may not necessarily the best option for everyone in all circumstances.

Many Canadians at this time of year may be facing some difficult financial decisions, such a choosing between coming up with a lump sum of money to contribute to their RRSP or paying down the mortgage and/or contributing to a Tax Free Savings Account (TFSA).

One of the difficulties many Canadians have is coming up with a lump sum of money at one time to put in their RRSP. That’s why many advisers suggest people set up a system of making regular automatic contributions to their RRSP, or other retirement savings vehicles like a TFSA.

Automatic saving allows you to benefit from dollar cost averaging. This is an investment strategy of buying regular amounts of mutual funds or other investments every month or week, limiting exposure to market volatility and allowing investors to purchase more when markets are down and less when markets are up.

Financial experts would probably agree that paying down mortgage debt is a good idea, but realistically people should take a balanced approach and save for their retirement as well.

Scott Evans, an adviser with BlueShore Financial in Vancouver, says interest rates are an important factor in the decision whether to pay down the mortgage or contribute to your RRSP.

The Bank of Canada is slowing down rate increases and if you expect a higher rate of growth from investments than the rate of interest you are paying on your mortgage, then you may want to put more in your RRSP and less toward your mortgage.

“It’s not only about your objectives but your risk tolerance level and the rates you are paying,” Evans says. “It’s all about what you are comfortable with and what’s going to let you sleep at night.”

The RRSP and the TFSA both are effective financial savings tools and strategies but they serve different purposes and have different tax treatments, which can determine which one is right for you.

In general, your marginal tax rate — tax on income including government-tested income such as Old Age Security — will determine whether it’s better to invest in an RRSP or a TFSA.

If you expect that your tax rate will be lower when you retire than it is today, then an RRSP is probably best but if you expect to be in a higher tax bracket when you retire than you are now, the TFSA is probably the best option.

The reason is that contributions and earnings accrued in your RRSP are not taxed until they are withdrawn, which usually is not until retirement, at which time you probably will be in a lower tax bracket than you were in your working years.

Age also is a consideration.

Younger people these days generally are using a TFSA to save money because their incomes are often too low to take advantage of the tax deductions of contributing to an RRSP. As their careers develop and their incomes increase, they then can begin contributing to their RRSPs.

Focusing on saving and paying down debt at the same time may seem contradictory but a financial professional can help you find the balance that is right for you.

“Make sure you have and use the correct savings vehicles and your investments and financial strategies match your goals and tolerance to risk,” Evans advises. “It’s all about what you’re comfortable with.”

 

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Copyright 2019 Talbot Boggs

Talbot Boggs , The Canadian Press

7 Feb

Steps to Repair or Improve on your Credit Score

Abbotsford Mortgage

Posted by: Matt Robinson

Credit Tip: While building or repairing your credit, you want at least two credit products (Credit Card, Line of Credit or Car Loan) with an original outstanding balance or a lending limit of $5,000.00 or more.

Both credit products should have at least the last 12 consecutive months with no missed payments.

HOW TO REPAIR BAD CREDIT

The deed is done. You’ve missed a few payments, you’ve overdrawn an account or two, you’ve maxed out your credit and are hiding like an ostrich with its head in the sand.

Obviously, you do not want to be in this position, but do not fear. There are steps to take to repair your credit, that will get you into a position for a financially stable future and to even buy a house within a year or two.

That is if you begin today.

Does this sound good to you? Then keep reading.

STEP 1: CALM THE FIRE

The first step and the most important is to begin to make all of your minimum payments on all of your debt.

You can’t start rebuilding your credit until you start making your payments, even missing one payment can take you so far back that it will feel like you are starting over again.

Also, remember this is step 1, don’t worry about making extra payments at this point, just the minimums. We are trying to put out the fire, if your credit card says the minimum is $10.00, send them $10.00.

Its also better to spread the wealth here, don’t get caught making large payments on a single card trying to pay them off one at a time, to rebuild your credit you going to have to work on all of them at the same time.

CREDIT TIP 1 – Set an automatic payment for the minimum payment to be sent to your credit cards or lines of credit 2-3 days in advance of the actual due date. It can take that much time for your credit company to receive the payment. If you pay your credit card on the date it is due, and the bank doesn’t receive it for a few days they will mark that payment late; it may not show up on credit bureau but it will affect your relationship with that bank,

STEP 1.5: PUT OUT THE FIRE

Bring all the balances on each card credit and line of credit to under your available credit.

I included this in Step 1.5 because some credit cards and line of credits will insist that any amount you are over on a credit card or credit line is paid as part of your minimum payment.

ORDER OF PAYMENTS

Ok, so here is what you are going to calm the fire.

Make all or as many minimum payments as possible. If you don’t have enough money to pay all your minimum payments, start with the smallest debt first and work your way up.

You would rather have three small credit cards in good standing, and one large account with a missed payment.

For the most part at this stage, the amount is ignored by the bureaus, they are just looking at how many cards have missed payments. So the fewer cards with missed payments the better!

STEP 2: REBUILD YOUR CREDIT

So you’re caught up on all your minimum payments, now it’s time to start rebuilding your credit.

YOUR FIRST GOAL

Your first goal is to bring all of your credit cards to under 50% of the current available limit.

If your credit card’s limit is $2,500.00, bring your balance down to $1,250.

This goes for all revolving trade lines like personal lines of credit, credit card, and yes even store shopping cards that have 0% interest.

The reason for this revolves around a credit term called “Utilization”, but all you really need to know is that the bank wants you to have some credit ‘available’ to show that you can have credit under your name without using it.

Those with good credit can control their temptations, and don’t ever really max out their available credit.

With that said, it is better to have two $5,000.00 credit products with balances of $2,000.00 each than to have one credit product with a limit of $5,000.00 and a balance of $4,000.00.

I know it doesn’t make sense, and I would have to write a whole other post to explain this concept alone, but for now, just trust me, do your very best to keep the amount that you owe under 50% of your limit.

I won’t sugar coat this step, it’s a hard one because it means paying back some of your debt. Paying down your debt to get below this 50% threshold will take time, and early on you may not be even close.

So keep this threshold in your mind as a goal, and early on feel free to completely ignore this rule and jungle around debt to take advantage of low rate offers on other cards you may have.

PLEASE NOTE – don’t worry about the threshold if you can put all your debt onto a single low rate line of credit or consolidate your debt into a low rate credit card option. Your priority will always get the lowest rate possible than optimize how you are carrying your debt.

YOUR SECOND GOAL

TWO TRADE LINES WITH A MINIMUM OF $5,000.00 LIMIT

The goal is to have two trade lines at a minimum of $5,000.00 each with no missed payments 12 – 24 months.

When applying for a mortgage, the minimum timeframe with out a missed payment or collection is 12 months. If you have recently filled for a bankruptcy or a consumer proposal you need at least 24 months of no missed payments after you have been discharged.

These are the minimums, you could still be declined depending on other factors, but at least you have a target now. 

DEFINITION: TRADELINES

Trade lines are any type of credit line that will go on your credit report. Car loans, credit cards, personal lines of credit and mortgages all count as trade lines.

WHAT CREDIT OPTIONS ARE AVAILABLE?

If you have bad credit it’s hard to apply for credit, right?

I know, you need 2 tradelines but when your credit is so bad no one will give you more credit. While that may be true for the majority of credit card companies and Big Banks, but there are exceptions:

  • Capital 1
  • People’s Trust
  • Home Trust
  • Lendit

Credit Cards and Lines of Credit

Now, these companies are likely not going to just give you a new credit card or line of credit on the spot without some sort of security. So be prepared to have to put down $250.00 – $1,000.00  as deposits for these cards.

The bank will keep your maximum balance at the amount of money you put down (similar to a debit card) but each month they will report to the credit bureau, which will improve your credit rating.

Big Banks traditionally decline these types of applications, even with security unless you are new to Canada or have no prior credit history. So feel free to start the application process at a major bank first, and then try the list above once you have been declined.

Investment Loans

If your credit is OK, but you are just needing an extra tradeline, you may want to consider an investment loan. Buying an investment (for example, a GIC) at the institution that you borrowing the money from, can increase your chances of approval.

This is not the ideal path for repairing credit but should be seen as a last resort. If are you stuck, this might be an option to consider. Basically, you have a forced savings plan while still earning interest.

You pay the bank some interest for the loan, yes, but are also rebuild your credit at the same time.

Auto Loans

Auto loans can also be a good way to build credit, but don’t get caught up in the purchasing process and buy a vehicle that you can’t afford. A lot of times as well they will get you excited about the vehicle and the interest rate will be extremely high.

I recommend that you try to find a vehicle with a payment that you can afford to pay off with in 18 months. This will ensure that you have recent credit when you apply for your mortgage for you new house, and will allow you to get pre-approved for more money as the payment will no longer exist.

How Often Should I apply for Credit?

Building credit is important, you want to do it quickly, but not too.

Try to apply for a new tradeline every 60 days, until you get 3-4 tradelines than stop. By waiting 60 days between applications you shouldn’t have any impact to credit, you may have heard that too many credit check can damage your credit. 60 days is more than enough time between checks to avoid this problem.

Remember you only need 2 tradelines, but by having 3-4 helps with balancing out utilization and shows maturity. Some of my past clients have had 15-20 open tradelines with limits exceeding $20,000 on each of them, and all with zero dollars owing on them.

STEP 3: MAINTAIN

Now that you have the right amount of tradelines, your balance’s are getting smaller and you can see your available credit start creeping up.

Stay Focused! Let your credit history grow as your debt declines.

The waiting game may be the hardest step if you’ve suffered from bad credit in the past. It will be tempting to go back to earlier spending habits once you see the available credit on your cards.

Question: How long can I expect to have bad credit for?

It is possible, but bouncing back from a credit history horror story does take a time and requires commitment.

The worse your credit trouble has been, the longer for it to bounce back.

12-24 months is standard for a credit ‘refresh’. Remember that poor credit performance in the past will not follow you forever.

Here are a few extra tips to help you along the way.

Tip 1: Do not close credit accounts!

A closed credit account will still show up when your report is pulled up. You will have to explain to the bank why it was closed.

Try to keep paid of cards open. Each month whether you use them or not credit cards report to your Credit Bereau and if they have a $0.00 outstanding balance, they look really good.

Change them to a zero annual fee and just let them sit there and help you boast your score, and as a bet of a PS, if you have 10 credit lines in the future, and you do make a genuine mistake, it will have less of an impact on your score than say you only have 1 credit card with a missed payment.

I recommend only closing them it the annual fee is too high, or if you really know that you will end up spending the money again.

Tip 2: Check your credit report

This might be a scary process that you don’t want to do. We understand this.

Who wants to see their credit report if you know it is bad news? Yes, it is easier to avoid, but it won’t help you fix the problem. Looking at your credit report is a good step towards improving it, so next time you look at it, you don’t have to be afraid.

Tip 3: Only apply for credit that you need

When you are applying for credit, banks will pull up your report. This will cause your score to go down if you apply many times in a short period of time.

This is different than never closing an account, you really don’t want to be applying for credit just for the sack of applying.

There is a special rule that applies to people who apply for credit too frequently, they are called “Credit Seekers”. Apply for 3-4 loans/lines of credit/credit cards in a month and you could be stuck with this label.

It will disappear as soon as you stop applying for credit, but why even worry about it, slow and steady wins this race. Keep the before mentioned 60 day rule in mind and slowly build your credit over time.

Remember: Good credit is the key to financial freedom.

Everything you want to do in the future is made easier with good credit, and it comes quicker. You just have to buckle down and make sure you have a vision or dream of want you are working towards.

Grab a picture of that house you want to buy, tap it over your credit card, or even through them in a glass jar and put them in the freezer. Both tactics will remind you to think twice and evaluate whats more important, this purchase I am considering now, or that goal that I have in mind.

I would wish you good luck, but that would be leaving this process to chance, so instead, I am wishing that you can find the dedication, focus and commitment to move towards your goals, and to a secure financial future. 

2 Aug

Top 3 Budgeting Apps To Help You Save For Your First Down-Payment

First Down-Payment

Posted by: Matt Robinson

First Down-Payment

In today’s society, people turn to their phones for many things such as research, entertainment, communication, and direction. So why not use your phone for financial purposes? There are multiple phone applications available on the market that can assist you in staying organized with your finances and help you achieve specific goals. These goals can range from paying for your Chilliwack mortgage on time or even saving for your first down-payment.

You need to be sure and have a lot of money saved up to pay for your down payment, which is a set percentage of your home’s purchase price. To help you get started, your Chilliwack mortgage broker, Matt Robinson with Dominion Lending Centres, has listed the top 3 budgeting apps to help you save for your first down payment.

#1: Mint

Mint is a free application that can help you manage your finances easily. This app has multiple features that include tracking bills, accurately budgeting, free credit checks, reminders on when your bills are due, payment categorization, and investment tracking all in one secure location. This app is personalized to you, it allows you to pay bills online, and it gives advice on ways to cut back on spending and increase your savings.

#2:  Debt Minder

Debt Minder on Go is an inexpensive app that can help you pay off debt and manage your finances. This app will strategically map out how you can reduce your balance by using a “Debt Snowball” method and customise each plan to your financial situation. You are able to select any type of currency you want, and this app will also show you your daily and monthly interest accrual rate in an easy to understand graph.

#3: iXpenselt

At a low monthly fee, iXpenselt is a daily and monthly expense tracking application that can help you save for your first down payment. This app’s features allow you to input your expenses and store photo receipts on the go. With this simple tool, you can consolidate all your debt and expenses into one area to help you easily track how much you are spending versus how much you are saving. You can then export this information from your phone into an excel file. For more information, please click HERE.

Contact Us

Contact your Chilliwack mortgage lender today for more information on these three budgeting apps. Or if you would like to get started on your mortgage application, please call 604-852-1703.

2 Jun

Chilliwack Market Update

Abbotsford Mortgage

Posted by: Matt Robinson

Congratulations on making the decision to become a homeowner. Owning a home has a lot of added benefits such as artistic freedom, more privacy, tax deductions, equity, and stable payments. Before you can start reaping these benefits, however, you must first find your dream home. This can be done by familiarising yourself with the current market. As your Chilliwack mortgage broker, Matt Robinson with Dominion Lending Centres can update you with the current residential trends, and inform you on when the best time to buy is.

Chilliwack Market

According to the Canadian Real Estate Association, the number of homes sold in April 2018 was 361 units, which is a 3% decrease from April 2017. Comparing the homes sold from January to April this year was 1,108 units, which is a 2.4% decline from the year prior. In addition, the average price of homes sold in April was $533,020, which is about a 16% increase from 2017, and on a year-to-year basis, the average sold price was $516,393, which is a 17.5% increase from last year.

Zolo.ca, states that the median listing price for singe-detached homes was $662,400, the median price for condominiums was $253,850, and the price for townhomes was $446,000. The change in price per year has increased 6.9%, and comparing asking prices from May 2017 to the present, has since increased 24.2%.

If you are looking to buy a home and obtain a Chilliwack mortgage, now would be the time before the market continues to increase. You could even use past residential pricing as a negotiation tool for cheaper rates and better deals.

Get Started Today

For more information on the current residential market, please contact your Chilliwack mortgage lender. With rates constantly fluctuating, Matt Robinson can go through your finances, let you know your affordability, and suggest when the best time to buy would be. His team at Dominion Lending Centres would love to work with you and help finance your dream home. So don’t wait, call his office today to get started at 604-852-1703.

14 May

Mortgage Rates And Why They Fluctuate

Abbotsford Mortgage

Posted by: Matt Robinson

As your local Abbotsford mortgage lender, I understand the confusion behind understanding mortgage rates and why they fluctuate. Mortgage rates can be determined by a number of different factors including, but not limited to:

 

  • Economy: Depending on how well the economy is doing determines if interest rates will rise and fall. For example, if the economy is doing really well then rates will increase, and the opposite will occur if there is a decline in the economy.
  • Residential Market: If there is an increase in the residential market then there will be more of a demand for mortgages. An increase in demand means an increase in rates.
  • Inflation: Mortgage brokers will analyze past and current rates to see how the market has changed over time. They can then predict where the market will head in the future. These analyses can determine if there will be inflation, and thus affect mortgage rates.
  • Global Factors: This includes unemployment, food and gas prices, and political involvement.

 

Being aware of the current market and understanding how these factors can affect the rise and fall of interest rates can help determine what the cost of your Abbotsford mortgage will be. For more information on factors that affect the economy, please contact Matt Robinson at Dominion Lending Centres at 604-852-1703.

 

Fixed Rate Mortgage

A fixed-rate mortgage is where your monthly rates are set and will never change throughout the duration of your loan term. These rates are determined by the Government of Canada bond yields. Bond prices and bond yields have an opposite effect on each other. This means that if bond prices are decreasing then bond yields are increasing. Bond prices will decrease if the economy is doing well.

 

Bond yields have a direct relationship with fixed rates. So if the economy is doing well then bond prices are decreasing, bond yields are increasing and fixed rates are increasing. If the economy is booming then consumers are purchasing more, which creates a higher demand. An increase in demand means an increase in rates.

 

Variable Rate Mortgage

Variable mortgages have rates that can fluctuate month to month, which is dependent on the lender’s prime rate. The Bank of Canada determines these rates since they choose the target overnight lending rate. The overnight lending rate is the interest banks accrue when borrowing or lending against themselves. If the overnight rate changes then so do the cost of borrowing and lending, which affects the prime rate. Variable rates are influenced by the prime rate, which means if the prime rate increases, then so will your variable rate.

 

Contact Us

To get a more detailed explanation of mortgage rates and how they fluctuate, please contact your local Abbotsford mortgage broker today. Matt Robinson is the local broker that will educate you and help guide you throughout the home loan process. So don’t wait, call his office today at 604-852-1703 to get started.

19 Apr

Mortgage Survival Guide – Abbotsford Mortgage

Abbotsford Mortgage

Posted by: Matt Robinson

Matt Robinson | Dominion Lending Centres

604-852-1703

info@matthewrobinson.ca

 

As a first time homebuyer, trying to figure out how to get a mortgage can be overwhelming. Matt Robinson, at Dominion Lending Centres, has created a mortgage survival guide to help you be more organised throughout the home loan process. Working with Matt Robinson to obtain your first Abbotsford mortgage can help you get the best options and rates on the market.

 

  1. Organisation:

Being organised with your finances can help prepare you for a mortgage. Before you start your home loan application, make sure you know your current credit score. Your income and credit score largely affected how much you are able to borrow. If you notice any faults on your record then you should fix these problems before your application is sent in.

 

  1. Pre-approval:

Contact your local Abbotsford mortgage lender to get pre-approved. This can be beneficial because it will let you know exactly how much you can borrow from the lender, and therefore, know exactly what price range to shop in. Knowing your affordability in advance can save you time by avoiding homes that are not in your budget.

 

  1. Income:

You are given more credibility depending on how long you have been working at your current job for. Lenders appreciate borrowers who have a steady income of at least two years with their current employer. If you constantly switch jobs, now might not be the best time to buy a home because lenders want to see that you are financially responsible.

 

  1. Savings:

Before you start your home loan application, make sure you have enough money in the bank to pay at least 5% of your home’s down payment. The more savings you have, the better your application will look. If you have a lot of debt and no savings, you will most likely be declined for a home loan. In addition, continue saving and avoid making other big purchases until after your loan has been approved. Taking on unnecessary debt can hurt your application.

 

Buying a home is most likely the biggest purchase you will ever make. Make this an exciting time instead of a stressful one. Following this mortgage survival guide will help prepare you for homeownership. If you have any questions or are wanting to get started on your application today, please contact your Abbotsford or Chilliwack mortgage lender at 604-852-703 or email info@matthewrobinson.ca.

13 Mar

The Difference Between Fixed and Variable Rate Mortgages

Mortgage

Posted by: Matt Robinson

Are you in the market for an Chilliwack mortgage, or are looking for an Abbotsford mortgage broker, well look no further because Matthew Robinson is here to help you!

When deciding which home loan is your best option, it is important you evaluate your finances. Be aware and honest about your income, the specific lifestyle you lead, and your personality. Some mortgage rates are riskier than others so it is important you recognise whether or not you can handle the inconsistency and potential risks that are associated with those loans.

So what loan is right for you? There are two main types of loans: fixed rate mortgages and variable rate mortgages.

Fixed Rate Mortgages

A fixed rate mortgage is a loan where the rates are consistent throughout the term of the loan. No risk is associated with this loan in terms of interest rates going up unexpectedly. Your monthly payments will not fluctuate, and instead stay consistent. This is a great option if you do not like to take risks. With this loan, you know exactly how long it will take you to pay off because the rate never changes. It allows you to accurately budget, however, higher interest rates are usually associated with fixed mortgages.

Variable Rate Mortgages

A variable rate mortgage is a loan where the interest rates are a lot lower than a fixed mortgage. This mortgage is associated with a lot more risk. Without a heads up, the interest rates could increase or decrease. This inconsistency can cause people a lot of stress, so it is important to understand if you can handle the risk or not. Assessing your financial situation and seeing if you can afford at least a 2% increase in your variable rate, is a good way to know if this option works for you.

Get Started Today!

Regardless of which loan you would like to go with, your local Abbotsford and Chilliwack mortgage broker can work with you and advise you on your best option. So don’t wait, contact Matt Robinson today at 604-852-1703 or info@matthewrobinson.ca.

8 Nov

Chilliwack Mortgage Broker – Characteristics of a Great Broker

Mortgage Tips

Posted by: Matt Robinson

There are already enough tough decisions to make when it comes to the financing of your new home – choosing the right mortgage broker shouldn’t be one of them!

Great mortgage brokers will always be available to their clients and will usually come highly recommended by friends, family, past clients and sometimes even real estate professionals. In addition to these qualities, there are several other characteristics every great mortgage broker should possess. To help you narrow down your search, and to make sure you are considering all your options fully, I have created a list of a few of the most important characteristics you should look for when you are choosing a mortgage broker for your home loan.

  1. Great mortgage brokers ask a lot of questions. (The more they know about you and your financial situation, they better equipped they are to help you find the perfect loan.)
  2. Great mortgage brokers are experienced. (Ask how long they have been working in and how often they improve their knowledge of the mortgage industry.)
  3. Great mortgage brokers keep their clients in the loop. (Find out how often you can expect to be updated on the progress of your mortgage.)
  4. Great mortgage brokers are honest. (Look for a broker who operates with integrity and is always straightforward with their clients.)
  5. Great mortgage brokers will find the best options for their clients. (This doesn’t always mean the lowest rate, so don’t automatically discount a broker because of that.)
  6. Great mortgage brokers clearly understand finance. (Brokers who are experts at finance can help you with the financial planning that is involved with purchasing a home.)

As a Chilliwack mortgage broker, I know that there are plenty of options available when it comes to who you will work with on your mortgage, but they aren’t always equal. It is important for you to choose a great mortgage broker who is the right fit for you and your situation.

If you are looking for a mortgage broker who possesses all these characteristics and more – who will always put your best interests above everything else – give me a call today! I would love to go over your loan options with you and show you smoothly the mortgage process can go when you work with a great mortgage broker.