Blog Post

Clarity, Ownership, and Structure in 2017.

Katherine Martin • Jan 04, 2017

Over the last three years, Canadian financial blogger Sandi Martin from Spring Personal Finance has released a series of posts with her dreams for her clients in each 2015, 2016, and now 2017. It started with finding clarity, then taking ownership, and now the series is brought together by the idea of structure. Nothing to do with conventional definitions of success and everything to do with freedom (her words). Here is the third instalment titled “What I Want for You in 2017” written by Sandi Martin, with links to the previous years posts. Let these words and ideas resonate with you and inspire you as 2017 is most certainly a year of possibility!

What I want for you in 2017

What I dearly want for you this year is structure.

(Just what you’d expect from an introverted money nerd who once answered “spreadsheets” when asked to name one thing that made her happy to her son’s kindergarten circle, am I right?)

Listen, when you hear “structure” I don’t want you to think about restrictions. The kind of structure I’m wishing for you has nothing to do with timetables, spreadsheets, or checklists (unless you’re into those sorts of things). I’m not trying to convince you to track your time, food, or money in a little book somewhere, or to twist yourself into knots in an endless pursuit to maximize, optimize, or anything-ize your life according to whatever “10 Ways Successful People Brush Their Teeth” article that’s making the rounds this week.

The kind of structure I want for you has nothing to do with conventional definitions of success ( higher net worth! efficient use of time! productivity! peak performance! ) and everything to do with freedom — within whatever circumstances life has placed you in — to be more you and to live more life .

What is structure, after all, but the invisible stuff that does the boring work of supporting the important stuff?

Let’s rewind a bit, because this is really part three of a story I’ve been telling for years.

In 2015, I wanted you to have clarity, remember?

How would your life be better if you were absolutely clear about what you want your life to look like, the resources you have or will have at your disposal, and the obstacles that you’ll have to get over, around, or through to make it happen?

Pursuing clarity means paying attention. Often in financial planning, as in most data-heavy professions, we encourage you to pay attention to easily measurable things like how you spend your money, how it’s invested, and what you’re going to spend it on over the next five, fifteen, or thirty years.

But how do you feel?

It’s equally important to pay attention to how satisfied/restless/anxious you are today and how excited/worried/unhappy you about tomorrow, and how those feelings change with new information, a change in direction, or sometimes something as simple (seeming) as the weather/news/that vexing update on Facebook.

Pursuing clarity means keeping your eyes open to the (changing) combination of circumstances that give you a sustained feeling of contentment with both the present and the future.

In 2016, I wanted you take ownership. To get comfortable with your own definition of success, to stop apologizing for the ways your direction veers away from the conventional path or looks like someone else’s definition of failure. To fearlessly be the most authentic version of you. To trade away the things that don’t fill you up for things that do.

To outsiders, your contented, authentic self might look too lazy, too ambitious, too social, not social enough, materialistic, ascetic, too involved with your kids, not involved enough at your church…there’s an infinite number of ways that a well-meaning community, predatory marketers, and privileged bloggers can make you feel bad about all the things you aren’t doing well enough or aren’t doing period. Don’t let them (not even me).

Well, that’s easy to say

Exactly. That’s why we need structure.

I’ll give you some examples of structure that flows from clarity and ownership in my own life. Be warned, though: they’re not particularly counter-cultural. Anyone who’s spent more than five minutes with me knows I’m a natural-born Hufflepuff: unambitious, stubborn, plodding…in short: boring and proud of it, so don’t expect anything earth-shattering.

First example: I finally realized that Facebook vexes me, and that although I love all (most of) the people I’m friends with and want to stay connected with what’s happening in their lives, I don’t want to mindlessly scroll through a newsfeed full of whatever Facebook has decided I should look at today. The happiest me is one who connects with people, not an algorithm, and I’m okay with missing a few things and being out of touch by not constantly checking in. It might not sound like structure to you, but the simple act of deleting the app from my phone stopped the mindless scrolling. It’s just not something I do on my laptop.

Another example: For the longest time, I thought I had to have free bank accounts and the best rewards credit card, because only dummies pay service fees or miss out on points, right? This led to a soul-sucking tangle of accounts that took tremendous mental energy to sort through every two weeks. I’m my happiest self when I’m reconciling accounts, absolutely…but not when reconciling accounts and transferring money all over creation is stealing time and energy away from more important things. With inspiration from my good friend Chris , I drew a picture of the fewest number of accounts that will still keep my business and personal stuff separate, and it’s so streamlined that I reconciled my bank accounts on New Year’s Eve. For fun.

One last example, I promise: Last year I realized just how frazzled it made me to fit focused work in between meetings and phone calls every day of the week while still leaving enough space to be with my family, serve my community, visit friends, and read a book or two. I’m my happiest self when I have big stretches of time to spend on whatever I want without rushing to the next thing, so I stopped scheduling meetings outside of Mondays and Tuesdays. I was worried that clients would be upset, colleagues would give up on me, and potential clients would call somebody else, but clients weren’t, colleagues didn’t, and potential clients might have but I’ll never know the difference.

(I warned you I was boring)

Let me sum up: Structure is intentionally designing the default settings of your life to align with what you want it to be. It’s automatic permission to be a little more yourself. Structure is saying no to a lot of things that don’t mean much at all so you can say yes to the few things that mean a lot.

In 2017, what I want most for you is to get clear about what fills you up, get brave about pursuing it even in the face of opposition, and set yourself up to say no to everything else.

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Mail

Katherine Martin

Origin Mortgages

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

Why Downpayment Source Matters

By Katherine Martin • 01 May, 2024

If you’re looking to purchase a property, although you might not think it matters too much, the source of your downpayment means a great deal to the lender. Let’s discuss the lender requirements, what your downpayment tells the lender about your financial situation, a how downpayment helps establish the mortgage loan to value. Anti-money laundering Lenders care about your downpayment source because, legally, they have to. To prevent money laundering, lenders have to document the source of the downpayment on every home purchase. Acceptable forms of downpayment are money from your resources, borrowed funds through an insured program called the FlexDown, or money you receive as a gift from an immediate family member. To prove the funds are from your resources and not laundered money from the proceeds of crime, you’ll be required to provide bank statements showing the money has been in your account for at least 90 days or that you’ve accumulated the funds through payroll deposits or other acceptable means. Now, if you’re borrowing all or part of your downpayment, you’ll need to include the costs of carrying the payments on the borrowed downpayment in your debt service ratios. If you’re the recipient of a gift from a direct family member, you’ll need to provide a signed gift letter indicating that the funds are a true gift and have no schedule for repayment. From there, you’ll need to show the money deposit into your account. Financial suitability Lenders care about the source of the downpayment because it is an indicator that you are financially able to purchase the property. Showing the lender that your downpayment is coming from your resources is the best. This demonstrates that you have positive cash flow and that you’re able to save money and manage your finances in a way that indicates you’ll most likely make your mortgage payments on time. If your downpayment is borrowed or from a gift, there’s a chance that they’ll want to scrutinize the rest of your application more closely. The bigger your downpayment, the better, well, as far as the lender is concerned. The way they see it, there is a direct correlation between how much money you have as equity to the likelihood you will or won’t default on their mortgage. Essentially, the more equity you have, the less likely you will walk away from the mortgage, which lessens their risk. Downpayment establishes the loan to value (LTV) Thirdly, your downpayment establishes the loan to value ratio. The loan to value ratio or LTV is the percentage of the property’s value compared to the mortgage amount. In Canada, a lender cannot lend more than 95% of a property’s value. So, if you’re buying a home for $400k, the lender can lend $380k, and you’re responsible for coming up with 5%, $ 20k in this situation. But you might be asking yourself, how does the source of the downpayment impact LTV? Great question, and to answer this, we have to look at how to establish property value. Simply put, something is worth what someone is willing to pay for it and what someone is willing to sell it for. Of course, within reason, having no external factors coming into play. When dealing with real estate, an appraisal of the property will include comparisons of what other people have agreed to pay for similar properties in the past. You’ll often hear of situations where buyers and sellers try to inflate the sale price to help finalize the transaction artificially. Any scenario where the buyer isn’t coming up with all of the money for the downpayment, independent of the seller, impacts the LTV. All details of a real estate transaction purchase and sale have to be disclosed to the lender. If there’s any money transferring behind the scenes, this impacts the LTV, and the lender won’t proceed with financing. Non-disclosure to the lender is mortgage fraud. So there you have it; hopefully, this provides context to why lenders ask for documents to prove the source of your downpayment. If you’d like to talk about mortgage financing, please connect anytime; it would be a pleasure to work with you.

Porting Your Mortgage

By Katherine Martin • 24 Apr, 2024

Porting your mortgage is when you transfer the remainder of your current mortgage term, outstanding principal balance, and interest rate to a new property if you’re selling your existing home and buying a new one. Now, despite what some big banks would lead you to believe, porting your mortgage is not an easy process. It’s not a magic process that guarantees you will qualify to purchase a new property using the mortgage you had on a previous property. In addition to re-qualifying for the mortgage you already have, the lender will also assess the property you’re looking to purchase. Many moving parts come into play. You’re more likely to have significant setbacks throughout the process than you are to execute a flawless port. Here are some of the reasons: You may not qualify for the mortgage Let’s say you’re moving to a new city to take a new job. If you’re relying on porting your mortgage to buy a new property, you’ll have to substantiate your new income. If you’re on probation or changed professions, there’s a chance the lender will decline your application. Porting a mortgage is a lot like qualifying for a new mortgage, just with more conditions. The property you are buying has to be approved So let’s say that your income isn’t an issue and that you qualify for the mortgage. The subject property you want to purchase has to be approved as well. Just because the lender accepted your last property as collateral for the mortgage doesn’t mean the lender will accept the new property. The lender will require an appraisal and scrutinize the condition of the property you’re looking to buy. Property values are rarely the same Chances are, if you’re selling a property and buying a new one, there’ll be some price difference. When looking to port a mortgage, if the new property’s value is higher than your previous property, requiring a higher mortgage amount, you’ll most likely have to take a blended rate on the new money, which could increase your payment. If the property value is considerably less, you might incur a penalty to reduce the total mortgage amount. You still need a downpayment Porting a mortgage isn’t just a simple case of swapping one property for another while keeping the same mortgage. You’re still required to come up with a downpayment on the new property. You’ll most likely have to pay a penalty Most lenders will charge the total discharge penalty when you sell your property and take it from the sale proceeds. The penalty is then refunded when you execute the port and purchase the new property. So if you are relying on the proceeds of sale to come up with your downpayment, you might have to make other arrangements. Timelines rarely work out When assessing the housing market, It’s usually a buyer’s market or a seller’s market, not both at the same time. So although you may be able to sell your property overnight, you might not be able to find a suitable property to buy. Alternatively, you may be able to find many suitable properties to purchase while your house sits on the market with no showings. And, chances are, when you end up selling your property and find a new property to buy, the closing dates rarely match up perfectly. Different lenders have different port periods Understanding that different lenders have different port periods is where the fine print in the mortgage documents comes into play. Did you know that depending on the lender, the time you have to port your mortgage can range from one day to six months? So if it’s one day, your lawyer will have to close both the sale of your property and the purchase of your new property on the same day, or the port won’t work. Or, with a more extended port period, you run the risk of selling your house with the intention of porting the mortgage, only to not be able to find a suitable property to buy. So while the idea of porting your mortgage can seem like a good idea, and it might even make sense if you have a low rate that you want to carry over to a property of similar value, it’s always a good idea to get professional mortgage advice and look at all your options. While porting your mortgage is a nice feature to have because it provides you with options, please understand that it is not a guarantee that you’ll be able to swap out properties and keep making the same payments. There’s a lot to know. If you’re looking to sell your existing property and buy a new one, please connect anytime. It would be a pleasure to walk you through the process and help you consider all your options, including a port if that makes the most sense!