Category: finance

Five questions to ask yourself before you rent or buy

Rent or buy a home?I met with a new arrival in Vancouver this week and one of the things we discussed was the whole issue of whether it is better to rent or buy.

I strongly believe that there is no single answer to this question as so much is down to your personal circumstances. So instead, here’s some questions to ask yourself that will help you make this decision for yourself.

1. Can I get financing?

This is the first question for a reason. If the answer is NO, then there’s no need to even think about any of the other questions!

Financing is available when you first arrive in Canada, despite your not having a credit rating here, IF you have enough money to put down on the property. That is generally 35% or more. And that can be a large chunk of change.

If you are newly arrived and have a job already, then your financing may be available with a smaller down payment. You will need to have passed your probation in your job.

My advice is to contact a mortgage broker (like ours: Keith Baker) because then you will have access to a wide range of financial institutions. There’s no charge for this and you’ll get advice that’s specific to you.

2. Do I know where I want to live?

This is a pretty basic question and one that every immigrant should ask quite carefully. Let’s face it there’s no point in buying a lovely home in an area that you sooner or later find is not one that suits you.

If you’ve done really good research and been over here enough to know what area is right for you, then buying is worth considering.

If not, then you’re probably still in the research phase of your move – even if you’ve landed. Now’s the time to rent for a while and check out whether what you think is the right area is really so in practice.

3. How long am I going to be here?

Real estate is a long term investment especially when it is your family home. If you aren’t sure how long you will be in the area, then renting might be better for you. Buying and then selling within a short time can be ok, but only when the market is active and moving up. When it is slow or the prices are going down then you might lose out.

4. What about schools?

Getting your child into a specific school can be a factor. Most schools have catchment areas and your challenge might be in finding a rental property in the right area for the school you want. And once you’ve found one there’s a possibility that your lease will not be renewed at the end of the year and you’ll be looking for another suitable place.

Buying somewhere to be in the right catchment area is a familiar tactic all over the world. In Canada it happens too. You would need to be certain that you want the school and are prepared to live in the area for the time your child is in that school. If so then buying is for you.

5. How do I feel about renting?

So far, if you’ve been following along, you’ve been asking practical questions. This one is all about your own thinking and gut feeling about renting or buying.

Some people just object to renting at all. They’re the ones who see rent as “dead money” or talk about “paying someone else’s mortgage”. Depending on how strongly you agree with this, you might be buying even if some of the other practical factors suggest renting is better.

Another psychological factor that often plays is “wanting to get settled”. Immigrating is a stressful process and for most of us, we are in limbo whilst waiting for the visas to come and the move to happen. That leads to a feeling of being unsettled that is uncomfortable. Buying a home and finally unpacking all your belongings is very appealing.

On the other hand, you might be someone who is happy to have no mortgage and to be flexible enough to move around. Perhaps coming to Canada was your chance to be freer and you wanted to move around and explore the country. Renting is for you! (Or maybe an RV?)

Mortgage rates as a guide

This edition of the Weekly Rate Minder from our mortgage broker – Keith Baker – has the latest, best rates for Canadian mortgages. Keith Baker and Dominion Lending Centres,  work on your behalf to find the mortgage that suits your needs. Best of all — their service is free.* It’s the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.)• Our Best National Rates
• Explore Mortgage Scenarios with Helpful Calculators on http://www.mypowermortgage.com

Terms Bank Rates Our Rates
6 Month 4.00% 3.95%
1 YEAR 3.00% 2.74%
2 YEARS 3.04% 2.69%
3 YEARS 3.65% 2.75%
4 YEARS 4.64% 2.99%
5 YEARS 5.24% 2.94%
7 YEARS 6.35% 3.59%
10 YEARS 6.75% 3.79%
Rates are subject to change without notice. *OAC E&OE

Variable rate mortgages from as low as Prime minus .30%

 Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

*O.A.C., E.& O.E.

7 TOP TRADE SECRETS to help you save time and money when sending money abroad

If you are sending money overseas, getting more for your money when buying or selling currency is important. Currency expert Sarah Davie from Moneycorp has listed below some useful tips that will help you when making international money transfers – whether you are making a one-off payment for a property, making ongoing mortgage payments or even repatriating funds back to the UK.

Tip 1: Don’t use the Bank to make your transfer

Many people leave foreign exchange in the hands of their bank. This is a big mistake.

It’s not a widely known fact but it’s certainly a costly one; currency exchange is one of the easiest ways for the bank to pick your pocket; and for larger transactions the losses can amount to hundreds, even thousands of pounds.

A specialist broker is much better placed to help you achieve a better rate of exchange when making a currency transfer. Although they trade currency in exactly the same way as a bank, as they solely deal with foreign currency and operate with reduced overheads they will be able to help you achieve much more for your money.

Another benefit is that the banks can charge up to £30 per transfer, foreign exchange brokers tend to offer a much lower transfer fee or in some cases no transfer fee at all.

Tip 2: Bigger Savings with Bigger Transfers

Typically, the larger the transfer, the bigger the saving; so if you are buying or selling a property abroad or you need to make a large overseas payment for any reason you are more than likely to benefit from a better exchange rate.

That said, you are still likely to see a considerable saving when making transfers with a specialist broker if you are exchanging a few thousand pounds or more.

Tip 3: Lower Fees with Regular Transfers

By setting up a regular payment plan for your regular payments, a foreign exchange specialist can work with you to ensure you make a saving every step of the way.  They will collect your GBP/Sterling via Direct Debit and then automatically send the foreign currency abroad.  The transfer fees can be as low as £0-£4 (in comparison to the typical £25 charged by the banks) per transfer – which makes a noticeable difference when considering monthly mortgage payments or pension transfers. Here is a recent bank comparison:

BANK

BROKER

Exchange rate*

1.1809

1.225

Amount sent in € per month

€ 1,000

€ 1,000

Amount you pay in £ per month

£846

£816

Saving in £ per month

£30

EXCHANGE RATE SAVING PER YEAR IN £

£360

Transfer fee per month (subject to bank and broker)

£25

£0

Possible receiving charges per month

£5

£0

Total Charges per year

£360

£0

CHARGES SAVING PER YEAR IN £

£360

TOTAL SAVING PER YEAR IN £

£720

*Exchange rate based on a bank comparison on 28/09/2012

Not only will a specialist be able to give you more flexibility than your bank, they have options that allow you to secure the price to protect you against adverse rate fluctuations and save you money. A specialist will be able to offer you 3 easy options for transferring your regular payments:

Option 1
Fix the Sterling amount and the amount of foreign currency you will receive will vary according to the exchange rate at the time of transfer. This is great for pension transfers.

Option 2
Fix the foreign currency amount and you will know how much foreign currency will arrive in your overseas account every time. This is great for mortgage payments.

Option 3
Fix both and you know exactly how much sterling will leave your account and how much foreign currency will arrive in your overseas account. This option fixes the rate; securing the cost of your payments over a set period.

Tip 4: Overseas Banks May Charge Extra

You will need to be aware that some overseas banks may charge you a handling fee of up to 1% of the value of the transfer.  This can add up depending on the regularity that you send money overseas.

You can however negotiate this issue with the receiving bank prior to transferring your money to try and minimise costs. You can also speak to a foreign exchange currency specialist to discuss possible options/solutions they can offer you.

Tip 5: Click here for greater SAVINGS

It is often cheaper to send money overseas via online systems provided by brokers as the costs are generally reduced.

The process is straight forward – you literally select the desired currency rate and then enter the amount you wish to transfer.  Payment can be made with a UK Debit card or a bank transfer; you then complete the deal by entering the beneficiary bank details for complete independence.

Tip 6: Don’t leave your transfers to the last minute

The longer you have to arrange your currency transfer, the more flexibility you will have to en­sure you get the best deal.

Although your broker will be able to offer you a same day transfer, the longer you have to manage your exposure the more options are available to you for example:

Forward contract
This allows you to fix an exchange rate today for a future date. Forward contracts can help protect against adverse currency movements and can be used to lock into favourable exchange rate with a 10% deposit up to 2 years in advance.

Limit Orders
You can specify a higher price at which you would like to trade at, if the market moves to this level your order will be fulfilled automatically.

Stop Loss Orders
Set a minimum level at which you would be happy to buy/sell your currency. Your order will be fulfilled automatically if this rate is reached in the markets. Ultimately, your worst-case-rate is being protected should the market move against you.

Tip 7: Get “FREE” Expert Advice

As exchange rates are continuously changing. It is important to discuss your requirements with a currency specialist; they will offer free expert guidance and be able to help you through the money transfer process step by step.

There are various options available to you, so it’s important to plan ahead. One of the main benefits of using a currency specialist over a high street bank is that the expert guidance and personal service you receive comes at no additional cost, so you are able to discuss your situation over a long period of time before you transfer your money.

This will give you much more control over your money and give you confidence that you have made your transfer at the right time and, therefore, at the right exchange rate.

[This article was provided by Sarah Davie of Moneycorp.]

New mortgage rules might make buying in Canada more difficult

MoneyThere are new guidelines for banks that came into effect at the beginning of November. These are designed to avert a property bubble by forcing lenders to apply stricter rules when qualifying buyers.

  1. If you are planning on putting down less than 20% on the purchase of your new home then you are a getting a high ratio mortgage. On high ratio mortgages where a variable rate mortgage or a fixed rate mortgage of less than 5 years is chosen then the qualifying rate will be the Benchmark rate (set by the Bank of Canada and currently at 5.24%). In essence then, the client is having to qualify at a much higher rate than the one which they will be getting thus making qualification that much more difficult.
  2. If you were looking to get a mortgage of over $1m then you have to put down 20% of the purchase price. Keith Baker described this as “a game-changer for clients who, previously, could have qualified for a high ratio mortgage (based on income) where the mortgage amount exceeded $1,000,000”.
  3. High ratio mortgages must be amortized at no more than 25 years. Conventional mortgages can be amortized over 30 years.
  4. Where Lines of Credit are offered together with a mortgage component (HELOC) the Line of Credit portion may not exceed 65% of the value of the property.
  5. There are stricter guidelines for calculating the borrower’s minimum monthly payments on unsecured debt with the resultant effect making it more difficult to qualify.
  6. The elimination of cash-back down payment mortgages.
  7. Stricter proof of income for self-employed clients.

These new stricter guidelines mean that it is important to seek advice from a mortgage professional so that you can plan your home purchase in Canada. Our broker, Keith Baker, can be contacted here.

Opening a bank account

Moneycorp
Foreign exchange

When we first started our relocation services, opening a bank account in advance of your arrival was a standard part of the package. As the years went by, and banks became warier of money laundering and the terrorist threat, this service became impossible.

Now at last there is a way. Our partners at Moneycorp have negotiated a service in conjunction with Royal Bank of Canada (RBC). If you are a client of Moneycorp then contact your account exec and ask them about this service. If not then it is simple to sign up with Moneycorp – it costs nothing and there’s no obligation to trade.

In our experience there are many other advantages to using a professional service, like Moneycorp, to handle your foreign exchange.

In case you don’t know RBC:

    •  They’re Canada’s largest  bank (by market capitalization and assets), and have been helping newcomers get settled for over seven generations
    • They have the largest branch and ATM (Automated Teller Machine) network in Canada
    • They provide service by phone in up to 180 languages
    • Rated as one of the top 10 “World’s Safest Banks”, by Global Finance magazine in August 2010.
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