10 Most Commonly Asked Mortgage Questions - Week 3

In week three of our series on the 10 most commonly asked mortgage questions this week we look at fixed vs. variable mortgages & credit scores. The blog is written by our guest blogger, John Eivindson, from Dominion lending, who services Gabriola, and has provided a wealth of information on lending practices.

Should I go with a fixed- or variable-rate mortgage?


     The answer to this question depends on your personal risk tolerance. If, for instance, you’re a first-time homebuyer and/or you have a set budget that you can comfortably spend on your mortgage, it’s smart to lock into a fixed mortgage with predictable payments over a specific period of time. If, however, your financial situation can handle the fluctuations of a variable-rate mortgage, this may save you some money over the long run. Another option is to opt for a variable rate, but make payments based on what you would have paid if you selected a fixed rate. Finally, there are also 50/50 mortgage options that enable you to split your mortgage into both fixed and variable portions.



What credit score do I need to qualify?

     Generally speaking, you’re a prime candidate for a mortgage if your credit score is 680 and above. The higher you can get above 700 the better, as you will qualify for the lowest rates. These days almost anyone can obtain a mortgage, but the key for those with lower credit scores is the size of the down payment. If you have a sufficient down payment, you can reduce the risk to the lender providing you with the mortgage. Statistics show that default rates on mortgages decline as the down payment increases.


What happens if my credit score isn’t great?

     There are several things you can do to boost your credit fairly quickly. Following are five steps you can use to help attain a speedy credit score boost: 1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so they’re below 70% of your limits. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on. 2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month. 3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring agencies that you’re regularly maxing out your cards. The best bet is to pay your balances down or off before your statement periods close. 4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. Use these cards periodically and then pay them off. 5) Don’t let mistakes build up. Always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.

Gabriola Real Estate Testemonial

From time to time we receive feedback from our clients on the service we as the Lynch's provide to Buyers & Sellers on Gabriola.  Here's an email we recieved from a client who said we could pass it along...

Three years after I bought my land at 1046 Harrison Way in Nov. 2008, I was still benefitting from the expertise and thoroughness of having dealt with the Lynch's as realtors.  They gave me so many important papers, things I did not, at the time, realize I would need.  Most recently, after purchasing a mobile home from Gordon's Homes, the Regional District of Nanaimo insisted more than a year later that they must see the proper Letter of Certification re: the septic system.  Luckily the Lynch's had providied that with the sales file.  in fact I seem to recall it was an item they were insisting must be completed before my purchase was finalized.  I did not understand why it was important at the time, but it certainly was. ...

A. Torchia

We are always greatful for the opportunity to work with so many wonderful clients!

Herring Spawn off the Gabriola Shoreline...

If you have a chance in the next few days, go down to berry point and check out the beautiful color of the ocean. The Roe herring are spawning and the roe has matured to reach its optimum quality. This brings the commercial boats close to the shoreline, you can hear the machines and the fisherman talking and see the seals in their glory. The herring are fished for their Roe, a delicacy in Japan. It's an amazing sight to see the color of water change and the flurry of sealife at your feet.


My kids and I have been reading a novel "Becca at sea" which gives an adventurous description of a grandmother rowing out to show her grand daughter the roe in close proximity off the shores of Hornby island. We were a little less adventurous and stood on the shore, but maybe well get out on those kayaks a little later.

Photo Courtesy:  Karen McKean

10 Most Commonly Asked Mortgage Questions - Week 2

In continuing with our series on the 10 most commonly asked mortgage questions this week we look at down payments & qualifying.  The blog is written by our guest blogger, John Eivindson, from Dominion lending, who services Gabriola, and has provided a wealth of information on lending practices.

How much money do I need for a down payment?


     The minimum down payment required is 5% of the purchase price of the home. And in order to avoid paying mortgage default insurance, you need to have at least a 20% down payment.


What happens if I don’t have the full down payment amount?

     There are programs available that enable you to use other forms of down payment, such as from your RRSPs, a cash-back product, or a gift.


What will a lender look at when qualifying me for a mortgage?

     Most lenders look at five factors when determining whether you qualify for a mortgage: 1. Income; 2. Debts; 3. Employment History; 4. Credit history; and 5. Value of the Property you wish to purchase. One of the first things a lender will consider is how much of your total income you’ll be spending on housing. This helps the lender decide whether you can comfortably afford a house. A lender will then look at your debts, which generally include monthly house payments as well as payments on all loans, credit cards, child support, etc. A history of steady employment, usually within the same job for several years, helps you qualify. But a short history in your current job shouldn’t prevent you from getting a mortgage, as long as there have been no gaps in income over the past two years. Good credit is also very important in qualifying for a mortgage. The lender will also want to know that the house is worth the price you plan to pay.

Recent Art Workshop held on Gabriola

     Donna Bray Zakreski is a fibre artist and recently Randi was lucky to have the opportunity to participate in one of her classes - right here on Gabriola.

Her workshops include machine quilting, use of dyes, inks, paints, watercolor crayons and surface design and so much more to inspire you to create.

In 2009 Donna was awarded "Best of Country, Canada" for the world quilt competition X111 Quilt which was named, "Where is the Ice?"

On Gabriola we are so lucky to have the amazing artists who share in their process and offer these incredible workshops.

Gabriola Recycles

 On Gabriola we are so fortunate to have GIRO, the Gabriola Island Recycling Organization.  As a result the most popular days on the island tend to be Wednesday & Saturday's - when GIRO opens their doors to the public to their "re-store" a place where you can find special treasures of once loved items...

On trip their recently I was on the hunt for a hard case suitcase that I could use as a mobile art case - and with the hint of a friend, I stumbled upon a hardshelled old make up case.  Of course, it had seen better days, but a good washing, and deconstructing the gold lamay interior and a few coats of paint - oh, yeah and a little help from the artist in the family, Tina Lynch, and voila....

I can't wait to sport this - maybe during Gabriola's art week festival at the end of April beginning of May.

See you next time at GIRO...

10 Most Commonly asked Mortgage Questions

     As REALTORs we are always looking to provide our clients with questions to answers they may have in regards to all aspects of a real estate purchase.  On Gabriola we had the opportunity to have Dominion lending come in to one of our meetings, who provided a wealth of information on lending practices.  As a result we've asked them to be a guest blogger over the next few weeks, where they'll answer the 10 Most Commonly asked Mortgage Questions... 

What’s the best rate I can get?


     Your credit score plays a big part in the interest rate for which you will qualify, as the riskier you appear as a borrower, the higher your rate will be. Rate is definitely not the most important aspect of a mortgage, however, as many rock-bottom rates often come from no frills mortgage products. In other words, even if you qualify for the lowest rate, you often have to give up other things such as prepayments and porting privileges when opting for the lowest-rate product.



What’s the maximum mortgage amount for which I can qualify?

    To determine the amount for which you will qualify, there are two calculations you’ll need to complete. The first is your Gross Debt Service (GDS) ratio. GDS looks at your proposed new housing costs (mortgage payments, taxes, heating costs and 50% of strata/condo fees, if applicable). Generally speaking, this amount should be no more than 32% of your gross monthly income. For example, if your gross monthly income is $4,000, you should not be spending more than $1,280 in monthly housing expenses. Second, you will need to calculate your Total Debt Service (TDS) ratio. The TDS ratio measures your total debt obligations (including housing costs, loans, car payments and credit card bills). Generally speaking, your TDS ratio should be no more than 40% of your gross monthly income. Keep in mind that these numbers are prescribed maximums and that you should strive for lower ratios for a more affordable lifestyle. Before falling in love with a potential new home, you may want to obtain a pre-approved mortgage. This will help you stay within your price range and spend your time looking at homes you can reasonably afford.

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Ever wanted to Sail around Gabriola

True sailing is a new business to Gabririola Island, serving and catering to visitors.

"For many reasons, we are blessed, fortunate to have discovered Gabriola Island, the people, the wild life, the wild turkey's, the deer and the robins, the ducks and the geese, witness the free spirit of the eagles as they soar over head sailing in the wind. Not far from this setting, is the shore and the sea, where my own spirit is set free, where my passion can not be contained, where my horizons are limitless and my dreams infinite, yet I am not dreaming, I am sailing aboard Samatas, the most perfect boat in the world, in the most perfect bay, in the place I call home, Gabriola Island BC Canada.

Henceforth,our hope and desire is, to share, this passion, this ability, this effortless interaction of wind, man, and vessel, to teach, compliment, gratify, and satisfy, and above all provide a day of TrueSailing"
Truesailing to all, Michael E Zane

Trade Fair this weekend at the Commons

Over 30 Gabriola businesses are taking part this weekend in the annual business trade fair.  We’ll be there, and we'd love to see you there as well!


                                Gabriola Commons

                                 Saturday, March 10

                                    11 am - 2 pm

There will be a silent auction. The Commons kitchen will have coffee and snacks available for a nominal price. Proceeds will go toward payment of the very popular apple cider juice press.

LUX Reno - Beautiful products for your home

I was recently at a friends acreage, she just finished building her green home and it's beautiful.  I love the layout of the home and all the details,  I instantly fell in love with her stainless steel apron sink in her kitchen, with a slight curve in the front and the modern lines- it is gorgeous.  I found out she had ordered it online from a company in Vancouver, Lux Reno .  They have a great site, easy to use with tempting photos, and I've now heard from three people that have ordered from them - all of them had a positive experience.  If you're building a new home on Gabriola or thinking about doing some renovations, this might help you create your dream, oh and the prices aren't bad either!