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Questions and Answers | Smart Home Series

Diane Buchanan • Apr 25, 2016

Welcome to the third and final post in a series about smart homes and technology. In case you want to start at the beginning, you can find the introduction here, while we went room to room in the second post. Now, this post WAS going to focus on new gadgets, fresh off the innovation press, and ready to be installed into any and all smart homes. However, we’ve decided against this topic for a couple of reasons:

Firstly, we understand that for the vast majority of people, smart home technology is still a new entity filled with unexplored nooks and crannies. Because of this, the idea of showcasing new gadgets, released in the first part of 2016, seemed somewhat redundant (mainly because everything is new). And while we understand that there remains a niche group that would (and does) enjoy this sort of technological update, in thinking about the general populous, we decided to go in a different direction.

Secondly, we understand that any list we could put together couldn’t and wouldn’t hold a candle to some of the intensive lists that already dot the internet landscape. Our offering would be a mere pittance in comparison. So instead we decided to include a link below. But consider this your fair warning, if you click the image below and take a journey over to thegadgetflow.com you might not ever come back. You thought Facebook was bad for rabbit trails, nope… the gadgetflow will have you back here looking to refinance your mortgage to make some of these wild smart home upgrades. You have been warned.

Are you still here? Okay good! So, this post will be for you: the homeowner (or the future homeowner). The goal is to lead you through some of the decision making processes when it comes to smart home technology.

*“Is now the time to jump in with both feet?”

*“If so, how much should I invest?”

*“What are the ‘must haves’ versus that which can wait?”

These are the questions that we want to entertain for the next few minutes.

“Is NOW the time to jump in with both feet?”

Five years ago, we would have had a different answer for you as it relates to upgrading your home with smart technology; a more tentative response. Why? Common sense dictates that you wait for the market to catch up to the technology. The first few buyers will, without fail, pay more than the masses who choose to wait and buy at a later date. Additionally, it’s prudent to wait in order to make sure the technology is failsafe.

But with the recent advancements in smart home technology, it would seem as though now is as good a time as any with which to “buy in”. And while the technology is still quite new, it isn’t hot off the press, and so the price point in 2016, while high, is not as high as it has been. In other words, the water’s warm; it’s safe to jump in… as long as you’re OK getting wet.

“How much should I invest?”

This question is completely dependent on the individual. Smart home “starter packs” can be as inexpensive as a few hundred dollars, while other (wealthy) individuals opt for the complete home renovation package; top to bottom hardwired changes. The former certainly won’t break the bank, and the latter will cost anywhere from a few thousand dollars to infinity (and beyond). As is with anything, understand where you sit financially, understand where your greatest need lies, and spend your money accordingly.

“What are the ‘Must Haves’?”

Home automation technology can be broken down into two sub groups. The first sub-group is safety & security and the second sub-group is leisure (now, obviously there’s a large gray area for lots of products that fit both of these sub-groups, however…)

We suggest starting with safety & security. Invest in keeping your family safe. Upgrade your locks and outdoor sensors. Upgrade your garage door opener and security system features. Upgrade your lighting system and appliances. Resist the urge to live in constant fear of the outside world, but be prepared. Start at this point and move out from there. There will be plenty of time for leisure after your family is well taken care of.

This series has only just begun to uncover the vast world of smart home technology. It’s a huge field with lots of growth potential and unlimited appeal. We hope you’ve gained a certain appreciation for this type of technology, and we hope you’ve had some fun doing it, as well.

And, as is always the case, for any and all of your mortgage needs, contact me anytime , I’m here to help.

DIANE BUCHANAN
 Mortgage Broker

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Downpayment Options

By Diane Buchanan • 15 May, 2024
Your downpayment refers to the initial payment you make when buying a property through mortgage financing. A downpayment is always required when purchasing, because in Canada, lenders are only allowed to lend up to 95% of the property value, leaving you with the need to come up with at least 5% for a downpayment. In fact, securing mortgage financing with anything less than 20% down is only made possible through mortgage default insurance. Canada has three default insurance providers: the Canadian Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth Canada), and Canada Guaranty. There is a cost for default insurance which is usually rolled into the total mortgage amount and is tiered depending on how much you put down. As your downpayment can be a significant amount of money, you probably need a plan to put this money together. So, let’s take a look at some of the options you have to come up with a downpayment. Money from your resources If you’ve been saving money and have accumulated the funds and set them aside for to use for your downpayment, you'll need to prove a 90-day history of those funds. As far as the lender is concerned, this is the most straightforward way to prove a downpayment. Any large deposits to your bank account that aren’t from payroll will require you to prove the source of funds. For example, if you recently sold a vehicle, you’ll need to provide the paperwork as proof of ownership, which corresponds to your account’s deposit. Or, if you have funds in an investment account that you’ve transferred over, statements of that transfer or account would suffice. You have to prove the source of your downpayment funds to the lender when qualifying for a mortgage to help prevent money laundering. Funds from the sale of another property If you’ve recently sold a property and you’re using the proceeds of that sale as the downpayment from your new purchase, you can provide the paperwork from that transaction to substantiate your downpayment. RRSPs through the Home Buyer’s Plan Okay, so let’s say you don’t have all the money set aside in your savings, but you do have cash in your RRSP. Assuming you’re a first-time homebuyer, you can access the funds from your RRSP Tax-Free to use as a downpayment. You’re able to access up to $35k individually or $70k as a couple. The money has to be paid back over the next 15 years. If you’d like more information on what this program looks like, please get in touch. Gifted downpayment Now, if you don’t have enough money in your savings, but you have a family member who is willing to help, they can gift you funds for your downpayment. With the increased cost of living, making it harder to save for a downpayment, receiving a gift from a family member is becoming increasingly commonplace. Now, to qualify, the gift has to come from an immediate family member who will sign a gift letter indicating there is no schedule of repayment and that the gift doesn’t have to be repaid. Proof that the money has been deposited into your account is required through bank statements. Gifted funds can make up part of or the entire amount of downpayment. For example, if you purchase a property for $300k and have $10k saved up, your parents can gift you the remaining $5k to make up the total 5% downpayment. Borrowed downpayment Suppose you aren’t fortunate enough to have a family member who can gift you a downpayment, but you have excellent credit and a high income compared to the amount you’re looking to borrow. In that case, you might qualify to borrow part or all of your downpayment. It’s possible to borrow your downpayment as long as you include the payments in your debt service ratios. Typically this is 3% of the outstanding balance. So there you have it, to qualify for a mortgage, you’ll need to come up with a downpayment. That can be through your resources, a property you sold, an RRSP, a gift from a family member, borrowed funds, or a combination of all five sources. If you’d like to discuss your downpayment or anything else related to mortgage financing; it’s never too early to start the conversation about getting pre-approved for a mortgage. Please connect anytime. It would be a pleasure to work with you!

Pay Down Your Mortgage Faster

By Diane Buchanan • 08 May, 2024
Being a home owner is excellent, having a huge mortgage isn’t. So, if you have a mortgage that you’re looking to get rid of as quickly as possible, here are four things you should consider doing. Accelerate your payments Making the change from monthly payments to accelerated bi-weekly payments is one of the easiest ways you can make a difference to the bottom line of your mortgage. Most people don’t even notice the difference or increased payment. A traditional mortgage with monthly payments splits the amount owing annually into 12 equal payments. Accelerated biweekly is simply taking a regular monthly payment and dividing it in two, but instead of making 24 payments, you make 26. The extra two payments accelerate the paying down of your mortgage. Increase your regular mortgage payments Chances are, depending on the terms of your existing mortgage, you can increase your regular mortgage payment by 10-25%. Alternatively, some lenders even offer the ability to double-up your mortgage payments. These are great options as any additional payments will be applied directly to the principal amount owing on your mortgage instead of a prepayment of interest. Make a lump-sum payment Depending on your lender and your mortgage product, you should be able to put down anywhere from 10-25% of the original mortgage balance in a bulk payment. Some lenders are particular about when you can make these payments; however, you should be eligible if you haven’t taken advantage of a lump sum payment yet this year. Making a lump-sum payment is a great option if you’ve come into some money and you’d like to apply it to your mortgage. As this will lower your principal amount owing on the mortgage, it will reduce the amount of interest charged over the life of the mortgage. Review your options regularly As your mortgage payments debit from your bank account directly, it’s easy to put your mortgage on auto-pilot and not think twice about it until your term is up for renewal. Unfortunately, this removes you from the driver's seat and doesn’t allow you to make informed decisions about your mortgage or keep up to date with market conditions. So let’s talk about an annual mortgage review. Working through an annual mortgage review with an independent mortgage professional is beneficial as there may be opportunities to refinance your mortgage and lower your overall cost of borrowing. By reviewing your mortgage at least once a year, you can be sure that you’ve always got the best mortgage for you! There is no cost involved here, just a quick assessment and peace of mind. If you’ve got questions about your existing mortgage or want to compare your mortgage to options available today, please connect anytime. It would be a pleasure to work with you.
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