15 Oct

Are you behind on your CRA Taxes?

Debt

Posted by: Kiki Berg

Are you behind on your Canada taxes? CRA can seize your house and your bank accounts

Nothing weighs heavy on one’s shoulders than owning a home and getting behind on your Canada Revenue Taxes.  Most banks will not be able to help you refinance your home to pay them off as CRA has 1st dibs on your house and assets. We have clients owing anywhere from $5,000- $300,000 in back taxes and have threatening letters from CRA that would keep anyone up at night.

There are options and strategies we can assist with financing your CRA debts:

  1. We use alternative lenders that charge higher fees/rates for a 1-year term
  2. short term 2nd mortgage to pay off your CRA debts and then refinance back with your lender.

Find out who we can help with a no-obligation application.

Let’s get you back on track!

 

Some CRA notes on penalties for filing late:

The first time you file late

You’ll pay:

  • late-filing penalty –5% of the amount of tax you owe, plus 1% for every month that your return is late, for up to 12 months. That adds up to a maximum of 17% of the tax you owe.
  • interest – at the prescribed interest rate on the amount you owe, beginning on May 1. You’ll also be charged interest on any late-filing penalties. Interest is compounded daily, not monthly or annually. The prescribed interest rate can change every 3 months.
  • If you miss the deadline again

    The late-filing penalties are doubled. For example, if the CRA charged you late-filing penalties for any of the 3 previous years, you would pay a penalty of up to 50% made up of:

    • 10% of the taxes you owe, plus
    • 2% of the taxes you owe for each full month that your return is late, to a maximum of 20 months.

Kiki Berg, Professional Mortgage Strategist

DLC Hilltop Financial

 

15 Oct

4 MORTGAGE STEPS TO OVERCOMING HIGH CONSUMER DEBT

Debt

Posted by: Kiki Berg

Client success stories are what make our job WORTH IT (We think most mortgage brokers would agree). So, with this in mind, we are sharing a recent client’s story that allowed them to not only purchase the home they wanted, but also pay down their own debt.

Mortgage Problem:

We had a young couple with two young children come to us looking to buy a detached home with a rental suite. They had several thousand dollars of consumer debt they had yet to pay off, and very little funding for the down payment. The husband was employed, and his wife ran a small business from their home. Their combined income was average, but with their significant amount of debt they weren’t sure they would be able to buy their dream home.

A close friend recommended that they visit a mortgage broker, and instantly we were able to see how we could help them not only find the down payment funding, but also help them pay down their debt.

Mortgage Solution:

Step 1: By the numbers.
First up, we looked at the numbers we would be working with to make this happen.

Purchase price of dream home: $600,000
Requested Mortgage Amount: $570,000
Loan to Value: 95%
Credit Score: 699 and 768

Step 2: Collect documentation.
For this particular mortgage we collected:
● Lease agreements for two suites (loft and basement)
● Notice of assessment and T1 generals from the last two years
● Standard income documentation for full-time employment
● Confirmation of self-employment for the last two years

Step 3: Calculate the total debt services ratio.
We took the above numbers and worked with them to present a debt service ratio that started out as 47.74% and brought it down to 42.5%

Step 4: Share the mortgage solution!
The down payment was provided by the parents and the rental income from the subject property was used. All their remaining debts were paid with $25,000 cash back from the lender who also provided an interest only payment Line of Credit to cover both the mortgage and consumer debt.

Our clients were thrilled to be able to purchase their dream home and to have their consumer debt under control. We are proud to be able to help couples like this to make their dreams become a reality, and really, all it took was 4 simple steps to get them into their home! If you have any questions, contact a Dominion Lending Centres Mortgage Professional near you.

 

 

 

 

 

 

 

 

 

 

 

 

 

Repost from:

Geoff Lee
GEOFF LEE
Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.

3 Jul

10 SECRET “To-Do’s” After you file Consumer Proposal or Bankruptcy

Debt

Posted by: Kiki Berg

If you are contemplating or have been through a Bankruptcy, Consumer Proposal or Debt Program you MUST read this!

Many people go through challenges in life that affect their finances. Divorce, job loss, health issues top the most common reasons. I commend you on getting your finances sorted out and back on track. The moment you FILE that consumer proposal or bankruptcy is the time to start rebuilding your credit history. YES, there are companies that can help with that. Too often I see people waiting YEARS to pay off their debt program before getting credit again, which sets you back 2 years.

Mortgage Lenders/Banks view Bankruptcy, Consumer Proposal and Debt Programs all the same…bad credit management.

When will it come off my Credit Bureau?

Consumer Proposal Programs:
Transunion and Equifax state that it will take 3 years for a consumer proposal to fall off your credit score after it has been completed. So if your proposal takes you 4 years to pay, then your score will be damaged for 7 years in total. If you are able to pay off your proposal quicker than your credit rating after a consumer proposal will get better faster. The key is that it will stay on your credit bureau for 3 years from completion.

Bankruptcy

  • A first bankruptcy for six years from the date of your discharge
  • A second bankruptcy for 15 years
  • TEN SECRET “To-Do’s” you must adhere too:
    A mortgage is something most people will have for a very long time. The rules for mortgages have tightened up in the past few years. A LOT.

    Once you have filed a debt program…you MUST adhere to these 10 rules.
    Excuses don’t fly with Lenders.
    You need to prove to THEM you are financially capable.
    They owe you nothing.

    1. If you go Bankrupt or Consumer Proposals while you have a mortgage, the Lender will see this when they review for your renewal and could 1. Deny your renewal and you will need to prepare to look for another lender/Bank or 2. they charge super high renewal rates. If you are considering either option or are currently in a proposal, please contact me to review your options far in advance of your renewal.
    2. No NSF charges on your bank accounts. Get yourself an overdraft to protect yourself.
    3. No missed mortgage payments – EVER
    4. No late payments on anything that reports to your Credit Bureau; credit cards, car loans, student loans or cell phone bills.
    5. No collections for any reason. Pay that issue and sort it out later.
    6. Double Bankruptcies or 1 Consumer Proposal and a Bankruptcy will make it difficult to get a mortgage. You can’t get around this anymore. It would be mortgage fraud. Lenders can look this up easily via the Bankruptcy Records Search.
    7. If you have a Bankruptcy that has property included, it will be VERY difficult for you to get a mortgage without at least 25% downpayment (for a purchase) or equity (refinance). On top, you will likely be in an Alternative mortgage for a very long time with higher rates and fees.
    8. Get two tradelines. Credit Card, Car Loan or Line of Credit. You need to have 2 years of history and two of them with spending limits of at least $2500.
    9. Don’t spend to the limits. Only use a max 50% of available credit.
    10. Use a Mortgage Broker who specializes in Credit Repair; who can review your file with you on a semi-annual basis to keep you on track as mortgage rules change.

    You need to look “squeaky clean” until your Bankruptcy or Consumer Proposal is removed from your credit bureau.

    Give us a call to be your partner once you have filed…or if you’re just in contemplation and the Banks have said NO to your debt consolidation, we will have solutions for you.

    Kiki Berg, Professional Mortgage Strategist

     

    16 Feb

    Improve your Credit Score. Here’s how!

    Debt

    Posted by: Kiki Berg

    Your credit score is a big factor when you apply for a mortgage.

    It can dictate how good your interest rate will be and the type of mortgage you qualify for.

    Mortgage Professionals are experienced helping clients with a wide range of credit scores so we can find you a mortgage product even if your credit is far from perfect.

    The good news about your credit score is that it can be improved:

    1. Stop looking for more credit. If you’re frequently seeking credit that can affect your score as can the size of the balances you carry. Every time you apply for credit there is a hard credit check. It is particularly important that you not apply for a credit card in the six months leading up to your mortgage application. These credit checks may stay on your file for up to three years.
    2. Don’t max it out. If your credit card is maxed out all the time, that’s going to hurt your credit score. Make some small monthly regular payments to reduce your balance and start using your debit card more. It’s important that you try to keep your balance under 30% or even 20% of your credit limit.
    3. Make your credit payments on time. People are often surprised that not paying their cell phone bill can hurt their credit score in the same way as not making their mortgage payment.
    4. Use your cards. That’s so its use is reported to credit reporting agencies. As long as you pay the balance off quickly you won’t pay any interest.
    5. Clear up your collections. You may not realize that an old cell phone bill, utility bill might be in collections. While you may disagree with it, pay it off and deal with it after.

    You may wish to consider special credit cards used to rebuild credit. You simply make a deposit on the card and you get a credit limit for the value of that deposit. They are easy to get because the credit card company isn’t taking any risks. I have options to assist in rebuilding your credit as well.

    Kiki Berg, Mortgage Strategist.

    29 Dec

    Fighting with your spouse? A 2nd mortgage might fix your marriage and your money.

    Debt

    Posted by: Kiki Berg

    ​​​Did you know that 30% – 40% of couples who get divorced is over money. Divorce isn’t cheap either, so now is the time to fix your fighting and your finances!

    Are 2nd mortgages a good idea? Sure, as long as you have an exit strategy, a budget and plan on how it will get paid off at the least amount of cost.

    With any debt consolidation loan, 2nd mortgage or other options; you want to ensure you can afford the payments, look at all debt repayment options and work with a debt or mortgage planner to ensure you are achieving your goal. Don’t just band aid a problem…

    So let’s take a look at a real life household family situation…

    Jack and Jill own a home, have two young kids, a fur friend, a camping trailer and two vehicles. Jack and Jill both work making about $110,000 a year combined. In the past, Jill took a few years off on maternity leave and during that time, the income dropped and the debts increased. The hot water tank flooded the basement, so $3000 for a new tank onto the credit card. They figure they can pay it off in a few months. Then, Jill’s best friend decided to have a destination wedding! Well fun times, also costs Jack and Jill $5000 to go to Hawaii to be part of the wedding. In keeping up with the Jones next door, they bought a trailer to go camping and the proud owner of  a 45,000 loan of 8% and $300 a month payments. What’s $300 right? Then Jack needed a Dodge Ram 1500 to tow their new trailer and got a $45,0000 loan at $700 per month. Yikes, insurance for those just increased your monthly payments from $130 a month to $160 a month…oh and the GAS! It’s for the family, so they tighten their budget spending.  While camping, Jack injures his back while goofing around with his ATV and is off work for 2 months and collecting EI…and the debt snowball monthly payment crunch effect begins and so does the depression, fighting and sometimes separation. Not enough money at the end of the month.  Sound like your family?

    Getting out of debt might require some hard decisions, such as selling assets. Challenge is the value of the new trailers, trucks and toys drops up to 10% when you drive it off the lot and your loans are usually higher than your toys. Many times there is lots of equity in home that you just can’t access right now due to credit issues or you just don’t want to break your existing mortgage (eek penalties). In a year or two you know you can wrap all the debt into your 1st mortgage and your payments will all be back in affordability line. It’s all in the planning and everyone’s family and financial situations are unique.

    “Why not just get a consolidation loan from the bank”, the client asks…
    Absolutely! IF you can qualify. If your financial strife has caused you late payments, then your credit score took a swan dive to the “sorry can’t help you land” from the Bank.
    Also, Banks can only loan you up to 65% of the value of your home due to new government rules and you need to have enough income to qualify for your new loan. Today, there are more declined debt consolidation loans than ever and people are seeking out expensive debt repayment programs or bankruptcy options that have up to $4500 in freaky fees and can kill your credit for up to 7 years. While these programs can be helpful for some, not always required to fix the problem.

    How do 2nd mortgages work out there in Google Land?
    Just Google 2nd mortgages and you may find many well know companies and mortgage experts who offer them. They may be called home equity loans, debt consolidation loans or freedom loans…they are all 2nd mortgages with a “pretty name” and no exit plan.  Finding the right company who isn’t going to charge you a 10% fee, 14% rates and huge renewal fees is another story. An example of a 2nd mortgage story where this happened. Client needed $40,000, finance company charged a $4000 fee and 11% rate for a 1 year term with a renewal rate of $2000. Bad planning here. Paying 10% fee and $2000 renewal rate is highway robbery in my opinion!

    How 2nd mortgages roll in my office.
    If you own a home, I can help. Maybe it’s not a 2nd mortgage you need…maybe it’s a reality check conversation and some idea tossing and budget planning.  If it is a 2nd mortgage you really want or need…I have made it my mission in life to make sure the average family going through life events isn’t getting screwed along the way. I have a standard fee for any size loan. $2500 and built into the loan. I use a few private lenders that are either FEE FREE or very low fees of under 2% of the loan. I have been doing this for 10 years, so my relationships with my lenders are good for clients. Bad credit, no or low income…no problem.

    We always set up our clients with an exit strategy. You should not have a 2nd mortgage for more than 2 or 3 years and we ensure that your credit is rebuilt and up to Banking standards within a few years, so you can qualify anywhere.

    If you’re feeling overwhelmed with debt, and your story sounds like Jack and Jill…give me a call or email for your 30 minute pro bono consultation that could save your finances and your family.

    Kiki Berg, Professional Mortgage Strategist.
    kiki.mortgages@gmail.com
    778-808-7756