Welcome to the May issue of my monthly newsletter!

This month we’re chatting about what you need to know at renewal time plus yard appeal ideas for the biggest ROI (and to help you get the most out of the good weather!). Scroll down for all the details!

What to Know at Renewal

Is your mortgage coming up for renewal this year or in 2025? Do you know about all the incredible options renewing your mortgage can afford you? If not, I have all the details here on how to make the most of your renewal!

Get a Better Rate: Did you know that when you receive notice that your mortgage is coming up for renewal, it’s the best time to shop around for a more favorable interest rate? At renewal time, it’s easy to explore other lenders for a preferable interest rate without breaking your mortgage. With interest rates expected to start coming down next month, reaching out and exploring the market could potentially save you a significant amount of money! I can handle this for you.

Consolidate Debt: Renewal time is also an excellent opportunity to assess your existing debt and decide whether consolidating it into your mortgage is beneficial. Whether it’s holiday credit card debt, car loans, education loans, or other debts, consolidating your mortgage streamlines your payments into one, potentially at a lower interest rate compared to other sources.

Invest in Renovations: Do you have home improvement projects waiting to be tackled? Renewal time provides a great opportunity to tap into your home equity for renovations, whether it’s your dream kitchen, bathroom upgrades, or even investing in a vacation property. Utilizing your equity can bring your renovation dreams to life.

Adjust Your Mortgage Product: Not satisfied with your current mortgage product? Whether it’s fluctuations in variable rates or seeking a different payment or amortization schedule, renewal time allows you to switch things up. You can lock in a fixed rate for stability or opt for a variable rate if you anticipate changes in interest rates. Adjusting your mortgage product can align it better with your financial goals.

Summer is coming up and you don’t want to miss your chance to make the most of your yard! To help you enjoy your space this year, I have broken down some of the top yard appeal ideas with the biggest ROI giving you the most bang for your buck and can increase your home’s equity and curb appeal at the same time!

Yard Appeal Ideas for The Biggest ROI

Summer is coming up and you don’t want to miss your chance to make the most of your yard! To help you enjoy your space this year, I have broken down some of the top yard appeal ideas with the biggest ROI giving you the most bang for your buck and can increase your home’s equity and curb appeal at the same time!

• Embrace Sustainable Landscaping: Incorporating native plants, drought-resistant foliage, and xeriscaping techniques not only reduces water consumption but also creates an eco-friendly landscape. Consider installing a rain garden or a drip irrigation system to conserve water and enhance the natural beauty of your yard.

• Install Outdoor Structures: Adding functional outdoor structures like pergolas, arbors, or gazebos can provide shade, define spaces, and add architectural interest to your yard. These structures can serve as focal points and create inviting outdoor living areas for entertaining or relaxation.

• Upgrade Your Lawn: A lush, well-maintained lawn instantly elevates the appearance of your yard. Invest in professional lawn care services, aerate and overseed to fill in bare patches, and regularly fertilize and water your lawn to keep it healthy and green. Consider alternatives like artificial turf for low-maintenance options.

• Incorporate Water Features: Incorporating a water feature such as a fountain, pond, or waterfall adds visual interest, tranquility, and a sense of luxury to your yard. The soothing sound of running water can create a serene ambiance and attract wildlife, enhancing the overall appeal of your outdoor space.

• Enhance Privacy: Increase the comfort and enjoyment of your yard by enhancing privacy with strategic landscaping, fencing, or screening options. Planting tall hedges, installing lattice panels, or adding trellises with climbing plants can create secluded areas and block unsightly views while adding beauty and greenery to your yard.

By implementing these additional ideas alongside the ones you’ve already outlined, you can transform your yard into a welcoming oasis that not only enhances your enjoyment but also offers a significant return on investment.

If you’d like to be added to my distribution list, send an email to mike.bohte@dominionlending.ca

Welcome to the April issue of my monthly newsletter!

Spring is here! To get you ready for the season, I have included some detailed information on what you can currently expect from the housing market, plus some small reno ideas that can have a BIG impact on your home!

In addition, enjoy Dr. Sherry Cooper’s economic insights around the latest interest rates and economic trends.

Get all the details below and have an amazing month!

2024 Spring Market Expectations

The spring housing market is just around the corner! Whether you’re looking to sell, buy, or want to ensure your mortgage is in order, knowing what to expect can help.

Here is the low down on what we are anticipating for various factors affecting the housing market this season:

• Interest Rates: While the Bank of Canada held the overnight rate steady at 5% for the past five meetings, it is expected that they will make the first interest rate cut in June or July this year, followed by additional reductions in the overnight rate to a more manageable level as the year continues. Experts are predicting that The Bank of Canada rate could drop to 3.75% by the end of 2024.
• Housing Prices: With interest rates expected to start coming down mid-year, that means more affordability and buyers in the market. As a result, it is expected that home prices will increase this year.
• Market Inventory: According to the Canadian Real Estate Association, the number of new properties listed has edged up 1.5% month-over-month in January, with this expected to rise as the interest rates drop.?

Looking to buy? For those of you who may be looking to purchase a home this Spring, here are some things that can help you be prepared:
• Get your finances ready by paying off as much of your debt as possible to improve your debt-to-income ratio and ensure you qualify for the best rate possible.
• Obtain a mortgage pre-approval before starting your search. This helps you understand your budget and makes your offer more appealing to sellers.
• Clearly define your priorities and preferences for a home. This will help streamline your search and make decisions more efficiently, especially as the market becomes more competitive.

First-time homeowner? Take advantage of first-time home buyer assistance if you have not been a homeowner in the past. You can find out more on the Government of Canada website here.

Looking to sell? If you want to sell your home this Spring, you will want to be ready to take advantage of the market! Some things you can do include:
• The first step is to find a reliable real estate agent who can help you with pricing and listing your home for sale. Not sure who to call? I can provide some references!
• Allow for open houses during evenings and weekends whenever possible to ensure you’re maximizing potential buyer foot traffic.
• I have even more tips on decluttering and getting your home ready to sell below!

Want to renew or refinance? If you’re not looking to sell or buy this Spring, you may still be looking for mortgage advice or assistance with your home and finances. Now is a great time to make sure your mortgage is working for YOU! With so many renewals coming up this year, keep in mind there are several benefits to taking time to review your renewal before you sign:
• Get a Better Rate: With interest rates expected to come down, taking time to reach out to me and shopping the market could help save you money!
• Consolidate Debt: Renewal is a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. In most cases, the interest rate on your mortgage is less than you would be charged with credit card companies or other forms of financing you may have.
• Start on that Reno: Do you have projects around the house you’ve been dying to get started on? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations so you can finally have that dream kitchen and updated bathroom, or even utilize it to purchase a vacation property!
• Change Your Mortgage Product: Are you not happy with your existing mortgage product? Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in! Alternatively, you may want to switch to a variable as interest rates level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster!

No matter your plans for this month or the coming season, don’t hesitate to reach out to me for expert mortgage advice!

Small Home Improvements That Make a BIG Impact

Whether you’re looking to sell your home this year, or just want to make some updates, I have put together six small home improvements that can make a BIG impact on your space! From improving saleability to refreshing your home, here are some simple and affordable ideas to help get you started:

• Painting: One of the easiest ways to spruce up your home for a refreshed vibe or sale is to add a new coat of paint! While it is a relatively simple task for a new homeowner to take on, you might be surprised at how many people will pass on a house because they are not a fan of the paint colors or the flooring. A fresh coat of paint – especially more neutral colors such as beige, cream, light grays, and soft blues or greens – can do wonders to make a home feel appealing.
• Light Fixtures: I don’t know about you, but I haven’t taken a good look at my light fixtures in a while. However, potential buyers will! Light fixtures are another low-cost and relatively easy improvement you can make to your home. Upgrading to newer styles and ensuring they are clean, with fresh LED bulbs, will help add an extra sparkle to your home!
• Update Your Hardware: Another overlooked aspect of a home are light switches and door handles. If your home is 20 years old, most likely your white light switch covers are not so “white” and your door handles are a little worn down. These are a cheap and easy replacement that will go a long way to boost your interior!
• Swap Out Your Window Coverings: Just like with a fresh coat of paint or new hardware, swapping out your window coverings is a small change that can make a big impact. Change your stale, white plastic blinds for wooden slats, or update your curtains to something fresh and vibrant!
• Refinish Your Cabinets: The kitchen is known to be a central space in most homes, but did you know roughly 80% of homebuyers feel that it is the most important space to consider when deciding on a new home? While a full kitchen renovation may be out of the question and all-new kitchen cabinets can cost thousands, there is a third option. Refinishing or repainting your cabinets is a great alternative for breathing new life into your kitchen!
• Curb Appeal: They say don’t judge a book by its cover but, when it comes to selling your home, first impressions matter. This is where curb appeal comes in! If a potential buyer pulls up to see overgrown weeds, clogged gutters, or cracked concrete, they are already going to have a negative impression of the home and it will be harder to impress them once they are inside. Attending to landscaping and any outside maintenance needs will go a long way in making your home more appealing. A pressure wash and a new coat of exterior paint can also do wonders to give your home a facelift!

By putting the effort into completing a few small changes around your home, you can reap big rewards when it comes time to sell – and increase your comfort in the interim!

Economic Insights from Dr. Sherry Cooper

The Bank of Canada’s Governing Council was split on the timing of rate cuts this year when they deliberated before the March press release. But the February inflation data signaled that rate cuts should be coming soon. After all, inflation has slowed markedly along with the economy.

While the unprecedented influx of new immigrants has boosted economic activity, the overall outlook for consumer spending will be dampened by the large volume of mortgage renewals in the next two years. Many will suffer a double-digit monthly payment increase, undoubtedly dampening discretionary spending. High food prices already burden consumers. Even though food inflation has diminished, prices have not fallen.

A June rate cut is coming, and there is even a possibility of an easing in monetary policy at the April 10 meeting. The spring housing season will be buoyant. Home prices already began to rise in February. And while home sales have been weak, the sunshine might entice the pent-up supply of existing homes to the market. For every move-up and downsizing buyer, there is a new listing on the other side.

First-time homebuyers may also start to take the plunge for fear that prices will rise further. They can lock in a two- or three-year fixed-rate mortgage if they are nervous. Many have been saving their money since 2022.

The Alt-A market is also poised for a pick-up as many more alternative lenders have strong balance sheets and well-diversified portfolios and talk about creating a demand for Alt-A mortgage-backed bonds. These would be relatively high-yielding bonds with reasonable credit ratings owing to the diversity of mortgages from every province in Canada.

There will be challenges and intense competition with new digital lenders increasing for the first time in Canada—much delayed from the US market innovation. Mortgage brokers need to be experts in a much more comprehensive array of products and solutions, many of them new.

We’re all used to seeing or hearing ads stating that this bank or that lender has the best interest rates available. We’ve all also been at a social gathering where people are bragging about how low their interest rate is. But, there’s a lot more to a mortgage than just an interest rate. There are also reasons why the interest rate is the main feature that’s advertised by lenders. We’ll get into a few reasons why this is the case. If interest rate is your only mortgage consideration, this is especially for you.

Rates

Lenders like to advertise rates because this is something that the average borrower understands. For example, most people will have no issue calculating or understanding that 1% of $100 is $1. But, how many people are comfortable calculating the penalty to break a mortgage before the end of its term? Ever heard of IRD (Interest Rate Differential)? If you have, great, now explain how its calculated. Some of you high-achievers will, but its somewhat of a trick question since lenders have different methods of calculating IRD. See my point? By quoting a low rate, lenders are able to ‘dangle the carrot’ in front of borrowers. These low rates attract attention much like Prime Day for all you Amazon shoppers. What’s not directly advertised is who qualifies for the advertised rate as well as the options that are or aren’t attached to that mortgage. Let’s talk about some of the common options attached to a residential mortgage and why the lowest rate could cost you more of your hard-earned cash down the road. Let’s face it, we don’t need any more hands in our pockets these days.

Penalties

Let’s talk about penalties. In order to break your mortgage prior to the end of its term, there are generally two methods of calculating the penalty. Calculating three month’s interest is self-explanatory. IRD is where things start to get a bit complicated. In simple terms, the IRD calculation uses your current interest rate and compares it to another rate that the lender sets. This rate could be the current posted rate, a 3 year bond rate, etc. Depending on the rate that the lender uses and the time left to maturity, the penalty can be massive. Its vital for borrowers to know this info and its my job as a mortgage agent to inform and guide you. Where am I going with this? You may be looking at a number of lenders who have similar rates and you decide that you’ve narrowed your choice down to two. Lender A has an available rate of 5% that you qualify for and Lender B has a rate of 5.05%. On the surface this seems like a no brainer, right? Not so fast young Jedi, these aren’t the rates you’re looking for. Both lenders use 3 months of interest or IRD to calculate penalties. Lender A with the lower rate uses an IRD rate that is far less advantageous to you as a borrower. This would result in a much larger penalty to break the mortgage. Now, I know you’re saying, “Mike, I have every intention of holding my mortgage until maturity”. Most people believe this. Reality is that the majority of mortgages in Ontario are renegotiated prior to maturity, resulting in a penalty. This can be due to many things including life events that are out of our control. So in this case, the lower rate may cost you more in the long run.

Pre-payment

Next, let’s move on to pre-payment options. Over the past 10+ years, we’ve become accustomed to a low interest rate environment. Given the choice between investing money or pre-paying your mortgage, most people were opting to invest. Low interest rates combined with sustained growth in the stock markets provided investment returns that could easily beat interest rates on mortgages. Unfortunately, that may no longer be the case with inflation, increased cost of living and rising interest rates. Why is this important? Well again, lets take the same two mortgages from above. Lender A has an interest rate of 5%, but offers no pre-payment privileges. Meaning, the only potential way to pay off that mortgage without penalty would be on a bona-fide sale of your property. Lender B charges a slightly higher rate, but allows an annual pre-payment privilege of up to 15%. Now, you may say, “I don’t have any extra money to pay down my mortgage”. Well, my response to that would be a question. Do you know for certain that you won’t have extra money to pay down your mortgage in 2 years, 3, 4, etc.? Maybe paying off your mortgage quicker isn’t a priority for you, but this is just one option. Again, for a small difference in interest rate, you now have options to accelerate how quickly you pay off your mortgage.

Porting

Lastly, portability. This is the ability to move or ‘port’ your mortgage at its current rate and terms to another property. This can be important if you’re looking to move and interest rates are on the rise or are higher than your current rate. This option is often overlooked by borrowers because many people decide to move at the most unexpected times. Again, this could be through a life event or because you simply fell in love with a property and you need to have it. This option can work in the borrower’s favour. But, as with all lenders, they want to secure their interest and will in turn charge a premium on the interest rate.

By no means is this an exhaustive list. These are just a few of the most common options available to borrowers. Hopefully this gets you thinking about your mortgage in ways that you didn’t in the past. I think you can see that mortgages are a lot more complicated than just an interest rate. But this will get you thinking about something other than rate. If this seems complicated, its because it is. There’s always a fine line between the options you need and the rate. A professional mortgage agent will help you find that line and guide you through financing the largest purchase most people will make. If you don’t have a professional mortgage agent in your corner, its time to think about why you don’t.