The Financing Behind A Big Reno

I’m an avid reader of the Globe & Mail’s Real Estate section, especially Dave Leblanc and Alex Bozikovic. Quite often we see dreamy renovations accomplished in their articles but rarely do we actually know how much they cost. When inquiring about this, the writers both mention the fact that the subjects did not want to reveal personal finances - quite fair in my opinion. It was interesting to see an article in today’s paper, then, that did discuss actual costs and showed us the final product. The Principals behind Solares Architects gutted and greened an old Roncesvalles home for $325,000 and have done an absolutely fantastic job. Two goals were accomplished: 1. a complete makeover of the property and 2. a complete energy update to the property. The results are astounding on both fronts, and the budget was quite manageable in my opinion for an end product of this high quality.

When reading their article and very detailed blog I got to thinking: “I bet a lot of readers want to know how they can do the same?”. So here I present to you: The Financing Behind A Big Reno so you can understand the process and how you can get there!

First let’s start off with the purchase. Using Tom & Christine’s example, they did the absolute right thing in seeking a home with good proportions, but one that didn’t check most of the boxes for other buyers looking for a turn-key property. In a white-hot area of a white-hot market, they managed to secure their property for less than asking. Awesome. Purchase price paid: $680,000 on an original ask of $750,000. Check 1. To avoid CMHC costs, one should put down 20% on $680,000 and arrange…


Just Saved My Friend $19,000 In Penalties.

Ugh, Divorce. Big D. Terrible thing to happen to people, complicated, and tough. We all know someone who has gone through it, and we all know the costs involved. The last thing on anyone’s mind when buying a home with their spouse is the potential of divorce. The first thing on everyone’s mind when divorcing is “how much is this going to cost me”. Ok, maybe not the first thing, but eventually it’s a question we all ask.

I have a real-life story for you. I have a client who bought in January 2013 and took out a 5 year fixed 2.99% mortgage. He was a first-time buyer, recently married, and starting a new life with his young family. Unfortunately for one reason or another, things turned, and 2 years later they’re splitting up. They only put down 5% so they didn’t have much equity. However, housing has still remained buoyant and this lets them get out with a little extra in their pocket. One of the main reasons? Penalty.

My clients were tied at the hip with a big bank. I mean EVERYTHING: TFSA, RRSP, chequing accounts, investments etc etc. Everything was at this bank, and they wanted their mortgage there so they can “see their balance” and “make changes online”. We got quoted the same rate from Big Bank as we did from the monoline lender that did not have those online capabilities (but does now). My client listened to me and decided he wanted to go with the monoline.

Guess how much it saved him?

$19 554.00

His penalty on a 2.99% mortgage differs by that amount. That is insane. Same: Term, rate, payment, amortization, original balance, final balance. Reason being? The big bank uses “Discount off posted rate at the time of closing the mortgage”. First…


What You Need To Close The Deal

Recently I ran into a disagreement with a client over the most simplest detail. What was it? Would you believe me if I told you that the client was unwilling to provide their bank statements WITH their account number on them? So much so that the client simply walked away and went back to their home bank - the same bank that can literally tap into their entire financial picture and get their last twenty years of history in one fell swoop. But I digress.

This incident got me thinking: How can I best explain to clients what is generally needed for closing of a deal? Well, here’s a list that will prepare you for that time!

1. Employment Documentation

Often times the lender asks for an employment letter and paystub from the past 30 days. If the paystub isn’t by ADP or Ceridian, or any standard payroll processing company (usually third-party), then there may be a further request to see a T4 and/or 90-days banking history deposits to show payroll going into the account.

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