The 5 C’s of Credit

When applying for a mortgage, it is common knowledge that you want to have good credit. But what does that entail? Below is a quick summary of what and how a financial institution examines your credit worthiness. It is separated into 5 categories, known as The 5 C’s of Credit!

1) Credit – The main way a lender can predict you are going to make consistent, on time payments is by reviewing your repayment history. They do this by reviewing your credit score to ensure you have a proven track record of managing money already borrowed to you.

2) Capacity – One of the most important of the 5 C’s, Capacity is the actual ability of repaying the loan. The lenders will review two things, the Gross Debt Service, as well as the Total Gross Debt Service. GDS is the costs of owning a home versus the gross income you make. TDS factors in GDS as well as any other monthly financial commitments (example a car loan or credit card payments).

3) Capital – This is determined by what you as a buyer have for an investment in the property, known as a down payment. 5% is the minimum down payment requirement.

4) Character – Is best described as a borrower’s trustworthiness of repaying a loan. This trustworthiness is proven through your length of employment and ability to save. Essentially the bank wants to see an active track record that you use your credit responsibly.

5) Collateral is considered additional security provided to the lender. The property itself and its value, location and characteristics can be considered as security, but collateral can also include outside properties or land owned, which helps lender feel “Secure” in loaning the funds.

By knowing what lenders are looking for in an application you can prepare and improve your position when it comes to purchasing your dream home. With so many products and options available, I am great a resource for information and for any questions you may have. Give me a call at (204)720-1225 and thank you for reading!

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 Michelle Desmond, Mortgage Broker

 Office: (204) 727-2177

 Cell: (204) 720-1225


What it Means When Prime Rate Changes

With the recent increase that TD has made to their Prime rate, it leaves a lot of mortgage holders with a variable rate questioning what this means to them. Let me tell you.

First, it is only TD that has recently changed their Prime rate from 2.7% to 2.85% – so far anyway. Typically once one lender makes that change, the rest will eventually follow but for now, this only affects you if you have a variable rate mortgage with TD bank.

When a bank decides to raise their Prime rate, it could mean you will have an increase in your mortgage payment to cover the extra interest but each bank does have the option to leave your mortgage payment the same and instead adjust the amount of your mortgage payment that will go toward your principle balance vs your interest. Meaning, a little more of your mortgage payment will be going to interest and a little less to principle. This will cause you to pay more interest over the term and will leave you with a higher balance at maturity.

This is just one of the many changes that have happened in our mortgage world over the last few weeks. If you are concerned with how these changes may affect your ability to buy, your current mortgage or even your future renewal options, please don’t hesitate to contact me.

Naomi 1

 Naomi Hamm, Mortgage Broker & Partner

 Office: (204) 727-2177

 Cell: (204) 724-7290


Appraisals: What are they and Why do you need them?


1) What is their purpose?

A home appraisal determines the professional opinion of a property’s true market value, whether it’s a house, condominium or vacant land. Typically, appraisals are used to assist in the decision making process of purchasing, selling or refinancing a home.

2) Why are they important to have?

An appraisal helps a seller list their home for a fair price. If the value is too low, the home may sell quickly but might not retrieve the highest dollar amount possible. Alternatively, if the price is too high the home could stay on the market for months. An appraisal is just as important for buyers who need to know that the value of the home they want to purchase matches the price tag. For homeowners looking to refinance their home, an appraisal determines the amount of funds that can be withdrawn from the property.

3) What do they mean for a bank or mortgage lender?

A bank or mortgage lender assesses attributes of a property such as neighbourhood, remaining economic life and value. An appraisal will determine how much money a bank or mortgage lender will lend someone for a mortgage. Appraisals are being more commonly used as the real estate itself is the collateral for the mortgage being provided. If the value of the appraisal is lower than the purchase price offered, the buyer is responsible for making up the difference between them.

4) What is the difference between an appraisal and a home inspection?

As we mentioned before, a home appraisal determines the professional opinion of a property’s true market value.  A home inspection gives you the current condition and economic life of the different parts of the home you’re considering.  This helps you understand the current overall condition of the house so that you know of any upcoming maintenance or repairs you may need to consider.

5) Who owns the appraisal and why?

Prepared using the guidelines of the specific bank or lender, the appraisal report is considered to be the property of the bank or lender. Even if a homeowner pays for an appraisal, the lender is still considered to be the appraiser’s client and has control over whether the appraisal is shared with the homeowner or not.

6) How is value estimated?

Cost Approach
Based on the current price of materials, the cost approach estimates what the cost to reproduce a new building identical to the subject property would be. The appraiser then subtracts any accumulated depreciation due to wear and tear and adds land value.

Income Approach
The income approach determines the value of an income producing property based on the income generated. Typically, this is calculated by dividing the net operating income of the rent (gross revenue minus all operating expenses) by the capitalization rate.


Direct Approach
This approach compares similar properties that have sold and/or active listings. The appraiser will take comparable properties that have recently sold and consider adjustments for differences. The variations in the comparable properties will have a value determined by the appraiser based on market evidence. Example: If the property being appraised has 4 bedrooms, and a comparable property has only 3 bedrooms, an adjustment for the amount of value the extra bedroom is worth would be added to the property being appraised.


We hope this helps explain why an appraisal is important in the home buying process. If you have any questions, please don’t hesitate to contact any of our qualified brokers.


How to Use Prepayments to Be Mortgage Free, Faster!

Using your mortgage prepayment options can drastically reduce the total amount you spend on your mortgage and shorten the time it takes to pay it down.. If you follow these three steps, you can be mortgage free sooner than ever!

1. Know your prepayment privilegesMORTGAGEPAYMENT
Most mortgages have allowances for you to prepay down your mortgage faster. The standard prepayment amount allowed per payment can vary depending on your mortgage provider.

We can work together on your goals to ensure you have the flexibility you require to pay your mortgage faster. Your mortgage provider may be able to increase and decrease your prepayment privilege at any time throughout the life of your mortgage.

This means that if any life event occurs and you need to reduce your payment to the minimum, you can with ease. Most mortgage providers allow this free of charge, but with some providers you can only change your payments a set number of times throughout the year.

2. Increase your payments
Anytime you increase your payments, the excess that you pay per payment goes directly onto the principal portion of your mortgage. This is a great way to drastically reduce the interest you will have to pay over the term of your mortgage.

Typical prepayments allow you to add between 10% to 20% of your payment amount to each payment, depending on your lender. Some lenders also allow the use of “double up payments” which let you double each payment!

Here’s an example of prepayments being used on a typical mortgage:

All calculations are based off of a $400,000 mortgage with a 5 year term and 25 year amortization at a rate of 2.59% with monthly payments.

No Prepayments:
Monthly payments: $1,809.84
Principal paid over 5 year term: $60,836.51
Interest paid over 5 year term: $47,753.89
Mortgage amount remaining: $339,163.49
Years remaining on mortgage after 5 years: 20 Years

Adding a 15% Prepayment:
Monthly payments: $2,081.32
Principal paid over 5 year term: $78,201.00
Interest paid over 5 year term: $46,678.20
Mortgage amount remaining: $321,799.00
Years remaining on mortgage after 5 years: 15 years & 9 months

As you can see, the mortgage was reduced by $17,364.49 and saved $1,075.69 in interest! The mortgage term was reduced by 4 years and 3 months in only 5 years!

3. Make a lump sum prepayment
Making a large payment can be a great option for paying down your mortgage, but may not be ideal for everyone. Lump sum payments help you reduce the amount of interest you will be required to pay on your mortgage. They can also be used to reduce your mortgage amount before selling your home and will reduce the penalty you will be required to pay.

Lump sum payments are usually between 10% – 25% of the mortgage total. Typically, you can make a lump sum payment onto your mortgage once a year. Every mortgage provider has their own specific guidelines for how you can make a lump sum payment in a calendar year. Your provider may require you put down a minimum amount for a lump sum prepayment, or you may only be eligible for one on the anniversary date of your mortgage.

If you decide that prepayments are for you, you can achieve mortgage freedom sooner than ever!

Contact me today and lets set your goals into motion.

IMG_2894 Chris Turcotte, Owner/Broker

 Office: (204) 727-2177

 Cell: (204) 720-4002



5 Ways to Damage Your Credit Score

1) Making Late Payments

  • In general, your payment history has the strongest impact on your credit score. About 35 percent of your Equifax Credit Score, for example, is based on your payment history. That means that any late payments – whether on your credit cards, an auto loan, your mortgage, or another credit account – could cause you credit score to take a dive. Your late payment history will stick around on your credit report, too. For example, one delinquent payment that is 30 days late can remain on your credit report for up to seven years.
    • Tip: Paying your bills in full and on time should reflect positively on your credit score. To avoid a late-payment blemish on your credit report, consider using automatic payments or setting up electronic payment reminders on your phone or computer.

2) Racking Up High Balances

  • Your credit score also takes into account your credit utilization (how much of your available credit you are using). A high debt-to-creidt ratio – meaning that you are borrowing a significant portion of available credit – will generally have a negative impact on your credit score.
    • Tip: Work on keeping your ratio of debt to available credit as low as possible to help boost your credit score. Avoid carrying a balance of more than 30 percent of your credit limit because if you take on any more debt, lenders may view you less favourably. If you are carrying debt, work on paying if off as quickly as possible. Paying off your current debt may open up some of your available credit

3) Applying for a lot of Credit at Once

  • If a creditor or lender accesses your credit report because of a transaction you initiated, it will trigger a hard inquiry on your credit report. If you apply for too much credit over a short period of time, triggering many hard inquiries, your credit score could drop and lenders may view you as a higher risk.
    • Tip: Because credit scoring models consider your recent credit activity to evaluate your need for credit, only apply for credit when you really need it to avoid overextending yourself.

4) Closing an Account

  • Closing one of your credit accounts could reflect negatively on your credit score because if will change your credit utilization. If you close an account, you may lower the combined credit limit on all of your accounts, making your debt-to-credit ration appear higher.
    • Tip: While positive credit behaviour – such as paying your bills on time – will reflect positively on your credit score, you don’t need to carry a balance on all of your accounts. Instead of closing an account, consider paying off a small purchase on the account every few months, which will generally get reported to the credit reporting agencies.

5) Having a Short Credit History

  • About 5 to 7 percent of your Equifax credit score is based on the length of your credit history, and the score considers both the age of your oldest account and the most recent account opened. If you do not have at least one credit account open for at least six months or if you do not have at least one credit account in the last six months, you man not have a credit history or credit score. Without a credit history, it is difficult for creditors to determine your creditworthiness when making decisions about extending you credit.
    • Tip: If you plan to borrow money in the future, start thinking about establishing your credit history now. If you don’t have a credit history or you have a thin file, consider opening a retail, gas or low-interest credit card in order to start building a positive credit history.

Know where you stand: as you work on boosting your credit score, make sure to regularly monitor your credit report so you know where you stand. If you spot any errors on your credit report, file a dispute with the necessary agency to have the erroneous information corrected as soon as possible. 



Our 2016 Pledge To You

2016 Pledge to youFor most people, the purchase of a home is the single largest financial investment they will make.

This means that the process can be very stressful without the right support.

As a consumer, you have a lot of options when it comes to selecting the right team of real estate and mortgage professionals.  Surrounding yourself with experts who understand the market and industry can make a huge difference in your journey to home ownership.

As your Mortgage Professionals, we will work closely with you to ensure that your needs are our top priority.  We want your home buying experience to be as smooth as possible, so that you can focus on this exciting new chapter in your life.

Our pledge to you is simple.  We will:

1) Present you with options so that you can make informed decisions.

2) Communicate clearly with you throughout the mortgage process.

3) Treat you with respect and understanding.

4) Look Out for Your Best Interest®.

A home is more than just a roof and four walls.  It is an investment in your family’s future, and a place where memories are made.  It is important that you are able to make decisions based on as much information as possible so that when you look to the future, you are confident that you have done everything you can to protect your investment.

Our duty is to find you the best rate, and to ensure that your mortgage is flexible enough for your specific financial needs and goals.  We work with multiple lenders so that you can decide the best fit for your financial requirements. 

At CENTUM Mortgage Choice, our business and client relationships are built on integrity and honesty.  Our relationships are the reason we can proudly say that we are Manitoba’s premier mortgage brokerage brand.


The best gift for your Holidays? Keep your credit history in shape!

Credit Card PileWinter has already hit Canada, and we are approaching the Holidays very quickly.  With Holidays come the purchasing of presents and quite often credit utilization. As credit history is one of several main components of a qualifying for a mortgage, budgeting for the Holidays and, furthermore, not maxing out your credit can avoid negative surprises in 2016.

While building a budget, you need to ask yourself one of the many important questions: “What is my Holiday budget, based on my current financial situation?” The answer to this question will take into consideration your credit utilization and your future projects and goals. Several elements are considered when it comes to your Credit Score also taking into consideration your homeownership goals.  As a first time home buyer, are you or will you be saving for a Down Payment? As an existing homeowner, maybe you will be looking at refinancing or renewing your mortgage?

A few key questions should be asked in order to determine a budget for the Holidays:
1-    How much can you (and are you willing to) spend?
2-    Who are you going to purchase presents for?
3-    What does my credit utilization look like? Have I made any late payments recently? What is my actual percentage used of my credit limits?
4-    Will I have the funds during all celebrations to pay these purchases in time?
5-    How will these purchases affect my long term financial goals?
6-    How can I track my Holiday spending?

Getting by making the minimum payment is not enough. Add on Holiday spending, and even your minimum payments can become no longer affordable. Keep in mind that credit delinquency appears for 6 years on your Credit Report, therefore maxing out your credit might not be worth it. Just remember, your friends and family wouldn’t want you to go into debt for the holidays. After Christmas, to get a handle on credit card debt, make a list of your unpaid balances, match them with their interest rate, and pay down the one with the higher interest rate first.

Some of us may not have immediate home ownership or refinancing projects, but the Holidays happen every year. For those planning on ownership and refinancing, CENTUM Mortgage Professionals are always looking for your best interest and can help you accomplish your projects.  If you have any questions or require assistance we have access to tools, services and education needed to improve your credit score along with guidance on how to get there.




Refinancing Your Mortgage To Get Some Breathing Room

High interest debt on credit cards, auto loans, or other consumer loans can be tough to pay off. Sometimes it feels like we’re getting nowhere by just making those high interest only payments each month. Not only that, no one likes the feeling of having multiple higher payments to make every month. Your poor pay cheque feels outnumbered when there are so many hands out needing to get paid every month. However, if you’re a homeowner, you might have some options to help you manage your debt, including refinancing your home to consolidate some debt.

As a homeowner, one way to start managing some of your higher-interest debt is to refinance your existing mortgage with a debt consolidation mortgage. For example, refinancing allows you to borrow additional money on your mortgage so you can consolidate your debts into one simple payment. That way you can easily budget with a structured payment plan and just one financial obligation to focus on.

A lot of people don’t understand just how much equity they’re able to borrow against when it comes to refinancing their home. I think this is largely because it’s not really explained to you at any point by your lender. Here’s a few points to remember about refinancing:

  • You can access up to 80% of the appraised value of your home. Now remember that this means you’ll have to have a appraisal done on your home from a licensed appraiser, opinions of value or Current Market Analysis from a real estate agent is not enough I’m afraid.
  • You can stretch out your amortization up to 35 years if needed. While I don’t recommend this, sometimes there are situations where it’s the only way to keep someone in their home. Keeping that payment manageable while paying off all your high interest debt is our number one priority.
  • There are fees to consider. You’ll likely incur a penalty on your current mortgage unless you’re up for renewal. You’ll need to pay for a appraisal but in some cases I can negotiate the cost to be covered by the lender, hey, I can be persuasive when I need to be. Finally, you’ll have legal fees for the refinance, as your lawyer will need to handle the disbursement of your money you’ll be getting.

Benefits of refinancing your high interest debt:

  • Interest rates on mortgages and home equity loans or lines of credit are often much lower than those on credit cards and consumer loans
  • Making a single payment to your debt consolidation mortgage or home equity loan or line of credit is much easier than making multiple payments to credit cards and other lenders
  • Peace of mind, no more late nights wondering how you’re going to tackle all those debts.

If you or someone you know want to look into the refinancing options available then don’t hesitate to contact me. As always, I’m here to answer any questions and show you how much you could be saving.


IMG_2894 Chris Turcotte, Owner/Broker

 Office: (204) 727-2177

 Cell: (204) 720-4002



Property Tax Payment Explained

property taxesJune 30 – a dreaded day in Brandon. The day property taxes are due for the current calendar year.  If you own a home and you have not already received your property tax bill in the mail, be sure to contact the city as they are due whether you receive your bill or not!

Since property taxes are due in the middle of the year, it can make it a little confusing for first time buyers (or second and third time buyers for that matter) so I thought I would share with all of you what I have learned over this last month or so.

We’ll start with the basics first. You do have options when it comes to paying your property taxes:

  • You can pay them all in one lump sum to the City on the Due Date
  • you can go on the City of Brandon’s TIPPs (Tax Installment Payment Plan), where you will pay 1/12th of your property taxes each month to the City through automatic withdrawl from your bank account
  • you can pay them along with your mortgage each month (or biweekly if that’s your payment schedule)

If you can afford to pay your entire property tax bill at once, that’s great, then it’s out of the way and you don’t have to worry about it for another year. But if you can’t, then I personally recommend the TIPS program as it seems to be the most simple. The City is the one that revises property taxes each year so if your taxes do change from year to year, they send you the bill along with the adjusted monthly payment amount you can expect.

Paying your property taxes with your mortgage through the lender can be a bit more complicated in the beginning but does even itself out for you over time. When you pay your property taxes this way, the lender will set that portion of your payment aside in a tax account and then when your property tax bill comes, they pay your taxes on your behalf to the City using that money from the tax account. Where it can get tricky is if you have not lived in your home for a full year as you will not have paid enough in that tax account to cover the amount the lender needs to pay on your behalf. Not to worry, normally the lender will still pay the taxes in full and then they will adjust your mortgage payments over the next year to make up the difference of anything they over paid for you.

That’s the easy part, now let’s get into the complicated part. When you take possession of you house, the new bank wants to be sure that property taxes are all up to date so in an ideal world, we’d all take possession of our new home on Jan 1 each year. This would make it unnecessary to do a property tax adjustment with the lawyer during closing.

We all know this is not the case. So let’s use an example of a May 1st 2015 possession and a property tax amount of $3000/year. Since you own that house on June 30 2015, you are responsible to pay that entire $3000 for the 2015 calendar year. Doesn’t seem fair since you did not live in the house from Jan 1 – April 30 2015. This is where the property tax adjustment comes in. When you meet with your lawyer, (s)he will make the adjustment so that you are being compensated for those 4 months that seller owned the home. How the lawyer does this is (s)he will figure out how much the property taxes were from January – April:

$3000/12 months = $250/month x 4 months = $1,000 is the sellers portion of the years taxes

Then lawyer will take the $1000 the seller owes for property taxes and take it off the purchase price (let’s say $200,000), so $200,000 – $1,000 = $199,000. He also adjusts deposits etc but we’ll leave that out as I just want to focus on the property taxes, not the closing costs. This means now the amount you pay the seller reduces to $199,000 instead of 200,000 so the lawyer will keep this money and use it toward the closing costs.

One thing to really be aware of is this $1,000 is for the property taxes from Jan – April 2015. You don’t physically see this money come to you from the seller because the lawyer just adjusted what you are paying for the lawyers services. It’s a little simpler than you paying $200,000 and then the seller giving you back $1,000. It’s 6 of one, ½ dozen of the other.

Keep in mind, now you are responsible for the entire 2015 year of property taxes, all $3,000. If you want to now get set up on the TIPPs program through the city, you will have to take that $1,000 you saved on your closing costs and give it to the City, along with the payments for May and June (an additional $500) to get the taxes paid up to June 30 and then the City can set you up on TIPPs and will withdraw the payments on a monthly basis for July 2015 and so on.

If you are paying your property taxes through the bank with a May 1st possession, you will only have made 2 payments of $250 by the time your full year of taxes are due. Therefore, the lender will be paying the $2,500 (that you don’t have yet) on your behalf and you’ll have to make up for that over the next year. They will adjust the tax portion of your mortgage payment accordingly. This would give you a fairly large total mortgage payment for the year but then when you are caught up, your tax payment should come back down to normal. I have suggested that clients put that $1000 toward their taxes up front so they have less being paid on their behalf by the lender, therefore having a smaller balance to make up over the next year.

Now let’s have a quick look at a possession after the taxes are due, possession date of Sept 1 2015. At this point, the property taxes for your new home have been paid in full for all of 2015 but of course the seller doesn’t live there for September – December so now you will owe the seller some money when your lawyer does the closing. Again, using $3,000 ($250/month), you would owe the seller $250 x 4 months so $1,000. Just as before, the lawyer would do the adjustment and instead of taking $1,000 off the purchase price, he’d forward and additional $1,000 to the seller. If you are paying through the lender, you will still make tax payments along with your mortgage payment and end up ahead for the next year and if you are on TIPPs, you wouldn’t make another payment until January of the upcoming year. 

I am sure this is as clear as mud to everyone. I know it took me a few times to really understand it. I just wanted to be sure everyone was aware of what happens with property taxes when they buy a home. Remember that each City/municipality has a different due date for their yearly property taxes and some do not offer a TIPPs program such as Brandon. There are also some banks that will not allow you to pay your own taxes if you put only 5% down as they want to minimize their risk by collecting tax payments on your behalf to be sure that they are paid on time.

If you have any questions at all about property taxes, please don’t hesitate to give me a call.

Naomi 1

 Naomi Hamm, Mortgage Broker & Partner

 Office: (204) 727-2177

 Cell: (204) 724-7290


Financing An Acreage

Some people love the big city life but others long for a big beautiful home in the country. Financing country homes on numerous acres can be a little tricky so there are a few things you need to be aware of if this is your dream.

The first thing to look at is the zoning of the property. If you are looking to do a regular residential mortgage, the zoning must comply. If the property you are looking at is zoned agricultural, that is a whole other story. You’d then be looking to do an agricultural loan which I am not going to get into the requirements here.

The next thing to consider is the number of acres. If your dream home is sitting on land with less than 5 – 10 acres, it is a little bit easier. We will typically be able to qualify you in the same manner as a regular City home except with an acreage, an appraisal is almost always required. The minimum down payment is normally 5% of the purchase price with this scenario. The difference comes when your home is located on more than 10 acres and has a barn or a shop as well. The banks will only give value to a home, garage and up to the 10 acres.

Here is an example:

If you have an accepted offer of $200,000 on a home with 20 acres that has a large shop on it (5% down payment would be $10,000), the bank will do their appraisal on the house, garage and 10 acres only. If the value comes back at $190,000 (because they have not counted the additional 10 acres and the shop but of course the seller wants paid for those too), the bank will finance 95% of the $190,000. This means, they will give you a maximum mortgage of $180,500 which increases your down payment from $10,000 to $19,500. You are paying, out of pocket, for the additional 10 acres and the shop.

Another thing to keep in mind is if you have a well and septic tank, which is typical on an acreage, you will need to have a water potability test completed (your realtor will help with this). The bank needs to know the water is safe. In regards to the septic tank, there is usually no issue here unless it is new, in which case a septic certificate is required from the municipality in order to confirm it has been installed correctly.

Financing your dream home in the country can be done, there are just a few different requirements that you need to be aware of. Your realtor and your mortgage broker will work together to help make the process go smoothly. If you have any questions, please don’t hesitate to contact me!


Naomi 2Naomi Hamm, Mortgage Broker & Partner

 Office: (204) 727-2177

 Cell: (204) 724-7290