David Hudson

One of the key aspects of buying a home is saving for the down payment. Mortgage Loan Insurance from Canada Mortgage and Housing Corporation (CMHC) can help bring homeownership within reach, with as little as 5% down.

What is Mortgage Loan Insurance?

Mortgage Loan Insurance is just that - insurance from a trusted third party, which protects lenders against default on a mortgage loan by a homeowner. In Canada, Mortgage Loan Insurance is generally required whenever a homebuyer has less than 20% of the purchase price available as a down payment. Because the lender is protected, they are able to offer mortgage financing even if you have a smaller down payment, at a rate of interest that is comparable to the lower rates typically reserved for homebuyers with a larger down payment. To obtain Mortgage Loan Insurance, an insurance premium must be paid based on the total amount of the loan (the purchase price minus the down payment). This premium can be paid in a lump sum, or added to your mortgage and included in your monthly payments.

How Much Does it Cost?

In general, the larger your down payment, the lower your premiums will be. The exact premium will be calculated when you apply for a mortgage. But to give you a general idea, the current Mortgage Loan Insurance premiums charged by CMHC are: Size of down payment (as % of purchase price)*

Insurance premium (as % of total loan)**

15% to less than 20% 1.75%

10% to less than 15% 2.00%

5% to less than 10% 2.75% or 2.90%***

* Mortgage Loan Insurance from CMHC is also available for loans of less than 80% of the purchase price.

** Premiums in Ontario and Quebec are subject to provincial sales tax. The provincial sales tax cannot be added to the

loan amount.

*** The rate of 2.90% is for mortgage loans where the down payment is funded through non-traditional sources, such as

borrowed funds, gifts, 100% sweat equity or lender cash back incentives.

For an additional premium, CMHC Mortgage Loan Insurance is also available for loans with extended amortization periods. The additional premiums are: Loan with amortization period greater than 25 years and up to 30 years: +0.20% Loan with amortization period greater than 30 years and up to 35 years: +0.40% For example, if you are buying a $200,000 home with a down payment of $10,000 (or 5% of the purchase price) amortized over 25 years, the Mortgage Loan Insurance premium would be 2.75% of your $190,000 loan, or $5,225. If you chose to extend the amortization to 30 years, an additional premium of 0.2% or $380 would be charged.

A good credit report and credit score are important factors in determining whether or not you will be approved for a mortgage. Here are some simple steps you can take to maintain a good credit history and improve your chances of being approved.

What is a Credit Score

Your credit score is a number that illustrates your financial health at a specific point in time. It also

serves as an indicator of your financial past, and how consistently you pay off your bills and debts.

This is one of the factors mortgage professionals consider in qualifying you for a mortgage.

How to Check Your Credit Score

To find out your credit score, contact Canada's two credit-reporting agencies: Equifax Canada at

www.equifax.ca and TransUnion Canada at www.transunion.ca.

For a fee, these agencies will provide you with an online copy of your credit score as well as a credit

Report - a detailed summary of your credit history, employment history and personal financial

information on file. You can also obtain a free copy of your credit report by mail. If you find any errors

in your report, notify the credit-reporting agency and the organization responsible for the inaccuracy

immediately.

If You Do Not Have a Credit Score

It's important to begin building a credit history as early as possible. You can begin to build one by

applying for - and responsibly using - a credit card. Your financial institution or mortgage professional

can help.

How to Improve Your Credit Score

Demonstrating your ability to manage credit is key to maintaining a good credit score. There are a

number of things you can do to improve your credit score. These include:

Always pay your bills in full and on time. If you cannot pay the full amount, try to pay at least the

required minimum shown on your monthly statement.

Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible.

Never go over the limit on your credit cards, and try to keep your balances well below the limits.

Reduce the number of credit card or loan applications you make.

Once your credit score has improved, work with your mortgage professional to obtain a mortgage that works for you.

Find Out More

To find out more about credit scores and reports, visit the Financial Consumer Agency of Canada

website at www.fcac-acfc.gc.ca and download or request a free copy of their guide, Understanding

Your Credit Report and Credit Score. This guide provides practical, straightforward information on how

to obtain and understand your credit report and score, as well as how to build and maintain a good

credit history.

With property values so high in metro Vancouver and the popularity of urban live/work spaces rising, it makes sense to fully investigate the benefits that you may be entitled to as an owner of a unique Vancouver Loft.

Vancouver lofts have long been coveted by local artist and craftsmen for there unique abilities to blend work space with open living quarters. The history of these properties comes from the days when Vancouver used to house a plethora of textile factories, garment districts and consumable's manufactures. As these industries became cost ineffective and went overseas, they left behind some of Vancouver's most coveted Real Estate to be. Even in the historic district of Gastown lofts have seen a lift in popularity with units ranging at the entry level to a cool $5 million plus!

With values and demand rising, many property owners to be are inquiring about the possible benefits of live work lofts in Vancouver. Below are some of the more important aspects to consider when looking at a live/work loft

So what's the deal with a live work loft?

Live/Work Loft: An officially designated workspace where the occupant operates a home- based business or dwelling unit, part of which may be used as a business establishment and the dwelling unit is the principal residence of the business operator. This definition matters most in cases where buyers are looking for a storefront or business where clients visit the office. Most often, these suites are limited to the ground floor and street level, which may not the most desirable location for strictly residential use.

Tax Implications: Like with any investment have your accountant and Investment Advisor check out your tax implications and watch out for claims of significant tax write-offs. When running a home-based business, there indeed are tax benefits to having a work space at home, whether you're in a live-work configuration, regular condo or detached home, with the proper tax set up and configuration you may have these options available regardless of the lofts zoning. There are also write-offs when you're renting, so make sure you consult a tax expert to verify any (this included any 2010 rental plans you may have).

Financing: One area where the live-work definition is very important is in financing. In Canada, any mortgage for which the buyer doesn't have a down payment of 20% must be insured through companies such as Canada Mortgage and Housing Corporation and Genworth Financial. The mandate of these insurers is to help provide Canadians with affordable and quality housing - not to insure commercial property mortgages. This aside, they recognize that many Canadians work out of their home, thus 25% of a property's floor space limit may be designated as work space in the agreement of purchase and sale. Anything more than that won't be insurable, which can cause some very significant problems.

Ask hard questions: do you really want to live in or rent out a building full of small business owners, where the common areas during the day could be very busy and noisy, when you were just looking for a nice, quiet open concept loft instead? After all, at the end of the day, marketing and insurance issues aside, a live-work condo has to be comfortable enough to actually live and work in.

David Hudson

David Hudson is a manager of Real Estate lending with TD CanadaTrust. David has worked in the Financial industries of the US and Canada and is a specialist in Lofts and Strata properties. Catch David's Blog or he can be reached at david.hudson@td.com

Once you find a home you want to buy, you will need to present the vendor with an Offer to Purchase or Agreement of Purchase and Sale.

An Offer or Agreement Usually Includes:

-your legal name, the name of the seller and the legal civic address of the home;

-the price you are offering to buy the home at;

-the items - other than the home - that will be included in the price (e.g.: window coverings,

-appliances or a satellite dish);

-the amount of the deposit;

-the date you want to take possession of the home;

-a request for a current land survey of the property;

-the date when the offer is no longer valid; and any other conditions that go with the offer, including property inspection and approval of

mortgage financing.

Conditions in the Offer to Purchase May Include:

Home Inspection

It is always a good idea to have the home you are buying inspected by a knowledgeable and

professional home inspector. If the home inspection report identifies any repairs that are needed, you and your real estate agent will have to discuss whether the condition of the home warrants withdrawing your offer to purchase or how these repairs may affect the price you are offering to buy the house for.

For Condominium or Strata Units

To buy a resale condominium or strata unit, you will have to get a satisfactory Estoppel Certificate or Certificate Status (does not apply in Quebec). This should be included as a condition in the Offer to Purchase.

New Home Warranty Programs

Warranties vary from one province to another, but usually they cover labour and materials for eligible items in your new home for at least one year after the construction has been completed. Before you sign a contract for a new home, contact your New Home Warranty Program office for a list of registered builders in your area.

Mortgage Approval

Even if you have a pre-approved mortgage certificate, you must still meet with your bank or credit union during the conditional offer period to get a final mortgage approval.

Once the Offer is Accepted

-Start thinking ahead and making plans:

-If you are currently renting, give notice to your landlord.

-Should you hire a mover or do it yourself?

-Send change of address notices to family, friends, and all the companies that you do business

with.

-Arrange for property insurance.

-Go back to your new home before closing to:

-Measure for window coverings.

-Measure for special-sized furnishings.

-Bring in a tradesperson for a renovation or remodeling estimate.

"The days of ridiculously cheap mortgage rates appear to be over. Now they're just cheap.

A sudden and dramatic jump in rates from Wednesday to Thursday means Canadians looking to break their existing mortgage and refinance at a lower rate may have missed the sweetest spot in recent history. But that doesn't mean people can't still trim their payments.

"We are not going to see these rates again for a while, not in the immediate horizon and maybe never," says Gary Siegle, a Calgary-based manager at mortgage broker Invis. "But rates are still at historical lows. Depending on what your penalties are, there is still money to be saved."

Toronto-Dominion Bank kicked off the hiking party, raising its five-year closed mortgages - the one of the most commonly chosen by Canadian homeowners - by a whopping 0.4 percentage points to 5.85 per cent on Wednesday.

That hike, its biggest in nearly a year, is on top of a 0.2-point increase unveiled last week by TD and several other big Canadian banks. Three other big banks followed in TD's footsteps and raised their posted rates in the last twenty-four hours, and other lenders are expected to follow suit.

With interest rates floating near generational lows, Canadian home owners who locked in last week may have been fortunate enough to negotiate a fixed-rate five-year mortgage as low as 3.65 per cent. "Clients who locked in during the last few months will enjoy the benefits of rates lower than any we have ever seen," says Eric Iankelevic, a mortgage agent with mortgagebrokers.com in Toronto.

Although no one knows where interest rates are headed, the consensus is that they are unlikely to be this low again for a long time.

"These are really emergency interest rates but emergencies do not last forever," says CIBC World Market economist Benjamin Tal. "I do think that interest rates will rise, I don't think it will happen in the very near future but three, four, five months from now they will be higher. Definitely a year from now they will be higher. And in two years, they could be notably higher."

The stunningly low interest rates have led many Canadians to break their existing mortgage and get in at a lower rate. Mortgage brokers say that despite the penalties associated with it, a massive chunk of their recent business has been refinancing existing mortgages. And despite the latest jump in mortgage rates, they don't expect that to change.

Kim Arnold, a mortgage consultant with Dreyer Group Mortgages in Vancouver, says with mortgage rate still well below their historical norm, it is still a good time to look at refinancing.

The decision to break an existing mortgage depends on the penalty, as well as how many years are left on the existing mortgage. It might, for instance, make more sense to break a mortgage with a year left on it as opposed to one with four years left.

"It is not always worth it," Ms. Arnold says. "It depends on the lender and it depends on the penalty."

Penalties for breaking a mortgage loan can be either the greater of three months' interest or the difference between the interest the bank could make on your mortgage as originally arranged versus lending money out at current rates. Most recently the so-called interest rate differential, or IRD, is the larger penalty and the one many lenders use.

All of this is specific to the lender and subject to negotiation. In some cases, banks will do a blended rate, which blends the existing mortgage with the lower current rate. At the end of the day, home owners may or may not end up paying less interest than if they had stuck with their current mortgage.

Mr. Iankelevic says some of the best deals out there are the variable-rate mortgages. Given that the Bank of Canada has said interest rates are likely to remain unchanged until the second quarter of 2010, a variable rate can provide huge savings for home owners who can stomach a little risk."

Roma Luciw is a writer and web editor of the Globeinvestor.com personal finance site. Please send any comments and story ideas to rluciw@globeandmail.ca.

With the wild rate swings that we have seen in the past few days can be quietly attributed to the jump in the 2 and 5 year bond markets. Jumping close to 3% on Monday, this gave the major Canadian lenders a golden opportunity to end the bleeding because of poor yield spreads on the fixed term products.

However a variety of economists agree that we are simply not over this yet. With General Motors declaring bankruptcy and the Canadian economic impact of this is yet to be felt, how many dealership will have there franchises revoked?

With the Bank of Canada staying firm on the prime lending rate (0.50%) how can the institutions continue to keep the fixed terms at these new levels? There is simply too much competition in the marketplace and it is only a matter of months before we see banks dropping rates to remain competitive with another.