Blog Post

Access Your Home Equity! Covid-19

Katherine Martin • May 13, 2020

As the initial shock of living through a global pandemic wears off and restrictions start to loosen, it would seem that Canada is en route to de-COVID soon (time will tell).

If you’ve been waiting until things flatten out before making any significant financial decisions, now might be a good to time start working through your options. If those options include accessing the equity from your home; for whatever reason, here are some of the things to consider moving forward.

Expect heightened scrutiny

Due to COVID-19, lenders are currently dealing with a tremendous amount of uncertainty, as many Canadians are still out of work and deferring mortgage payments, appraisal values are in question, and sales in the housing market have slowed down considerably. And for most lenders, the best way to deal with uncertainty is by being cautious.

Moving forward, you can expect heightened scrutiny on any mortgage transaction. Qualification standards are no longer hard and fast rules, but rather guidelines. So although you may qualify to access up to 80% of your property’s value based on the government regulations, depending on the lender, they might only be comfortable lending to 75% or less.

Part of this heightened scrutiny will also include a more in-depth assessment of your employment. Lenders want to see evidence of stable income to ensure you have the means to make your new mortgage payments.

So if you’ve experienced any type of job loss or reduced hours, if you have deferred your mortgage payments, or if you’ve accessed any government relief programs, qualifying to refinance your mortgage won’t be a walk in the park.

55+? Consider a reverse mortgage

For those Canadians 55+ who have significant home equity, a reverse mortgage is worth serious consideration. Qualifying for a reverse mortgage is way less complicated compared to traditional mortgage financing as there are no income or credit requirements. Any money borrowed is tax-free and does not impact CPP or OAS qualifications.

Instead of making regular payments to reduce the total balance outstanding, the interest is added to the total mortgage amount and increases each year.

Accessing home equity, without having to make regular payments, has proven to be the ultimate in cash flow management and a useful tool in helping older Canadians live their desired lifestyle.

You need a plan

Despite the uncertainty, mortgage lenders are still in the business of lending money. It is still possible to refinance your mortgage and access your home equity, but if a lender assesses you’re using your home as a personal ATM, it’s probably not going to work out.

So, the best plan of action is to have a plan of action. That starts with working with an independent mortgage professional who understands the lending landscape and can provide you with mortgage options at many different lenders.

If you have any questions, please don’t hesitate to contact me anytime , together we can look at all your options and figure out a plan going forward.

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Mail

Katherine Martin

Origin Mortgages

Phone: 1-604-454-0843
Email: kmartin@planmymortgage.ca
Fax: 1-604-454-0842

Improving Your Credit Score

By Katherine Martin • February 19, 2025

Your credit score and how you manage credit are huge factors in qualifying for a mortgage. If you want the best interest rates and mortgage products available on the market, you want a high credit score. Here are a few things you can do to improve your credit score. Make all your payments on time. Making your payments on time is so important; in fact, it might just be the most important factor in managing your credit. Here's how credit works. When you borrow money from a lender, you agree to make payments with interest on a set schedule until the debt is repaid in full. Good credit is established and maintained by making your payments on time. However, If you break the terms of that schedule by not making your payments, the lender will report the missed payments to the credit reporting agencies, and your credit score suffers. It’s that simple. The more payments you miss, the lower your score will be. If you fail to make payments for over 120 days, the lender will most likely send your debt to be recovered by a collection agency. Collections stay on your report for a long time. So the moment you realize you have missed a payment or as soon as you have the money for it, make the payment. If something prevents you from making a payment, consider contacting the lender directly to let them know what happened and work out an arrangement to make the payment as soon as possible. It's good to note that lenders only report late payments after a payment is 30 days late. If you miss a payment on a Friday and catch it the following Monday, you won't have anything to worry about - except maybe an NSF fee. Now, just because payments don't report until being 30 days late, don’t get comfortable with making late payments; the best advice is to pay your debts on time, as agreed. Stop acquiring new credit. If you already have at least two different trade lines, you shouldn’t acquire new trade lines just for the sake of it. Of course, if you need to borrow money, like to purchase a vehicle to commute to work, go ahead and apply. Just remember: having more credit available to you doesn’t really help your credit score. In fact, each time a potential lender looks at your credit report, it may lower your credit score a little bit. With that said, if you already have two different trade lines and your lender offers you an increase on your limit, take it. A credit card with a $10k limit is better for you than a credit card with a $2k limit because how much you spend compared to your credit card's limit impacts your credit score. This leads us directly into the next point. Keep a reasonable balance. The more credit you use compared to the limit you have, the less creditworthy you appear. It’s better to carry a reasonable balance (15-25% of the card’s limit) and pay it off each month than to max out your credit cards and just make the minimum payments. If you have to spend more than 25% of your card limit, try to remain under 60%. That shows good utilization. Paying down your credit cards every month and carrying a zero balance will undoubtedly improve your credit score. Check your credit report regularly. Did you know that roughly 20% of credit reports have misinformation on them? Mistakes happen all the time. Lenders misreport information, or people with the same names get merged reports. Any number of things could be inaccurate without you knowing about it. You might even have become a victim of fraud or identity theft. By checking your credit regularly, you can stay on top of everything and correct any errors promptly. Both of Canada's credit reporting agencies, Equifax and Transunion, have programs that, for a small fee, will monitor and update you on any changes made to your credit report. Handle collections immediately. When checking your credit report for accuracy, if you happen to find a collection has been registered against you, deal with it immediately. It could be a closed-out cell phone account with a small balance owing, a final utility bill that got missed, unpaid parking tickets, wage garnishments, or spousal support payments. Regardless of what it is, it will harm your credit score if it's registered on your credit report. The best plan of action is to handle any collections or delinquent accounts as soon as possible. Use your credit card. If you have acquired credit cards to build your credit score, but you rarely use them, there is a chance the lender might not report your usage, and that won’t help your credit score. You'll want to make sure that you use your credit at least once every three months. Many people find success using their credit cards for gas and groceries and paying off the outstanding balance each month. There you have it. Regardless of what your credit looks like now, you will continue to increase your credit score if you follow the points outlined above. If you're looking to buy a property and you’d like to work through your credit report in detail, let’s put together a plan to get you qualified for a mortgage. Get in touch anytime; it would be a pleasure to work with you!

How To Establish New Credit

By Katherine Martin • February 12, 2025

If you’re new to managing personal finance and you want to learn about credit, you’ve come to the right place. Establishing new credit is a bit of a catch-22. To build a credit history, you need credit. But it’s hard to get credit without having a credit history. So, where do you start? Well, the first thing you should know is that building credit takes time. It’s not something that happens overnight. If you’re looking to secure mortgage financing, you will want to have a minimum of two trade lines (credit cards, loans, or lines of credit) with a minimum limit of $2500, reporting for at least two years. If you don’t have any credit yet, the best time to get started is right now. However, that may be difficult because, as we've already identified, without a credit history, most lenders won’t feel confident about taking a chance on you. What’s the solution? Consider a secured credit card. With a secured credit card, you make a deposit upfront that matches the amount you want to borrow. A reasonable amount would be $1000 deposited on a single secured credit card. You then use your secured credit card to make household purchases and regular utility payments, paying off the total balance each month. If you default on the money borrowed for whatever reason, the lender will retain the money you put up as collateral. When looking for a secured credit card, be sure to ask whether they report to the two nationwide credit bureaus, Equifax and TransUnion. If the credit card company doesn't report, the credit card account will be useless for your purposes; move on until you find a company that reports to both credit bureaus. Once your secured credit card begins reporting to the credit bureaus, you begin to have a credit score; usually, this takes about three months. Now you can start to seek out a second trade line in the form of an unsecured credit card. Don’t forget to ensure that this card reports to both of the credit reporting agencies. Another option at this point could be a car loan. From here, you simply want to make all your payments on time! But what happens if you’re looking to secure mortgage financing before you have a fully established credit report? Well, if you have someone who would consider co-signing, you can certainly go that route. The mortgage application will depend on their income and credit report, but your name will be on the mortgage. Hopefully, when the mortgage is up for renewal, you’ll have the established credit required to remove them from the mortgage and qualify on your own. Although establishing credit takes a minimum of two years, it really begins with putting together a plan. If you’d like to discuss anything credit or mortgage-related, please get in touch!