INFO MPH
MAY 2023 EDITION

Mortgage brokers: your best bet when renewing your mortgage

Your mortgage term is coming to an end within the next few months and your financial institution has sent you the renewal document by mail. It’s ‘simple.’ All you have to do is sign at the end of the document to get its best rate.

The operative word is ‘its.’ In fact, you may not be getting ‘the’ best rate on the market. What’s more, the rate your financial institution is offering may not be adapted to your current situation.

My online rate is lower than yours

For the past few years, financial institutions have evolved in an ultra-competitive market. They are waging a very aggressive war to win over your mortgage. In this quasi-jungle, your mortgage broker can help you obtain the best offer possible.

Mortgage brokers represent, on average, around twenty different financial institutions; however, his or her role is to serve YOU and not the lender. When you begin shopping for your new mortgage, you may find preferential rates that are below the one your mortgage broker has recommended. The reason: the rates displayed online is not the only factor to take into account.

Because the interest rate plays a major part in the overall negotiation, your mortgage broker’s role is to evaluate your needs based on your current situation. For example, if you’re already in the process of selling your home, you may be willing to settle for a higher interest rate on your monthly payments in order to avoid a $10 000 penalty once your house is sold a few months down the line.

Also, don’t forget that your credit score also influences what interest rate you can get. Your mortgage broker will look into the best options for you as he or she will take care of the entire mortgage process.

Get a head start and reserve an interest rate

You don’t have to wait until your financial institution sends your renewal notice to start looking around for a new interest rate with a mortgage broker. You should schedule a few appointments with various brokers before making your final decision. Don’t hesitate to ask them about other financial institutions and what professional contacts they have in the field. They will not be able to divulge the outcomes and specific issues of transactions made with other clients. However, they will nevertheless give insight into past experiences. This will help you just which broker will best suit your needs.

Just because you’re looking into a new mortgage rate doesn’t mean you have to jump in right away. You can reserve your rate that you want to maintain up to 120 days before the transaction. This option can reassure many a homeowner in a rapidly changing market!

So why should I work with a mortgage broker?

In sum, a mortgage broker works for your best interests and ensures that no matter how complex your situation is, you’ll be well-represented with various financial institutions when your mortgage comes up for renewal.

Key takeaways

  • Avoid wasting time and shopping for a new mortgage rate with 20 different financial institutions.
  • Reserve your mortgage rate with your broker.
  • A mortgage broker will help you find the best rate possible.
MY TIP OF THE MONTH

Buying a second home

The purchase of a second home is often motivated by a need for change and a desire to escape one’s daily routine. It’s a major decision that has to be considered from multiple angles.There are several key factors you need to think about before committing to this real estate project.

What is a second home, and how is it different from a principal residence?

A second home is typically a vacation home—a secondary residence purchased for use as a weekend or holiday pied-à-terre.

It’s important to understand that principal and secondary residences are subject to different tax rules: The sale of a property designated as a principal residence is fully or partially exempt from capital gains tax. This is not the case when you sell a second home.

The pros and cons of a second home

Buying a second home has pros and cons.

After a difficult work week, who doesn’t dream of escaping to a private oasis? A cottage or waterfront home is also a great place to spend quality time with family and friends. Not to mention the profit you could make by turning it into a rental property!

If you do choose to lease your second home, knowing your tax obligations is essential. Similarly, it’s important to plan for succession to avoid potential headaches and friction among family members.

Buying a vacation home means spending on renovations and maintenance, but also on home decor and furniture. But there are other less obvious costs to consider: rental management fees, insurance, taxes to be paid at the time of purchase and every year thereafter, heating and electricity bills, as well as travel expenses.

Owning a second home is exciting, but it’s also a big time commitment; keep in mind that you may have to put other projects on the back burner as a result.

Taking stock before buying a second home

Before making any decisions, you need to start by evaluating your finances. There’s no point even considering buying a second home unless you can afford all of the associated costs.

Analyze your needs

One of the most important criteria for your second home is its location. Do you want a place in the city or the country? Near or far from where you live? If you plan to work from this property, make sure it has access to high-speed internet so your productivity isn’t affected.

Whether you want a cottage for weekends in nature or a beachfront condo for vacation getaways, the location will affect how often you visit your property and how much you spend on transportation.

A second home is also an opportunity to envision a different lifestyle. If you’re a fan of winter sports, the best choice would be a cottage near a mountain. If you’re more interested in water sports, a second home near a lake might be a better fit.

Assess your financial situation

Ideally, you should have a realistic budget drawn up before you begin looking at potential homes. The goal is to set a spending cap to avoid being tempted by properties beyond your reach. Your mortgage broker will evaluate how much you can afford, your repayment capacity, and your debt ratios. Note that acquiring a second property may increase your tax burden and debt, which could force you to delay other plans.

Financing your second home

Several elements will be taken into account to assess the amount that may be granted to you when you apply for financing, like the mortgage and costs associated with your main residence.

Calculate the costs of this investment

The above-mentioned costs are often lower for a second home than a primary residence. However,  other types of expenses should be anticipated. For instance, if you’re not visiting the property regularly, you may need to shell out for septic tank services, snow removal, gutter cleaning, or lawn care.To calculate your borrowing capacity, you can choose from a host of free online tools or get in touch with a broker.

How much is the down payment for a second home?

According to the Canada Mortgage and Housing Corporation, the down payment on a second home must be at least 5% of the property’s value. This is the same as the minimum requirement for a principal residence.

On the other hand, for a second home that you could only live in 3 seasons a year, the minimum down payment is 10% of the purchase price.

Mortgage or line of credit?

As with a primary residence, a mortgage is one way to finance a second home. However, the lender will need to assess several aspects of your property, such as its location, to determine whether they can grant you the loan and under what conditions.

If you have a 20% down payment, you may want to consider taking out a line of credit for up to 65% of the actual value of your property.

If you have been a homeowner for a few years, re-mortgaging your main property to finance your secondary residence could also be a good option, as your main property has probably appreciated in value since you acquired it.

Making an informed decision

There are numerous aspects to consider before buying a second home, and they deserve a thorough analysis. Doing your homework will make it easier to arrive at a decision that suits your needs and your budget. No matter your needs and wants, you can count on your Multi-Prêts broker to offer the right advice for your circumstances!

How do you calculate the capital gains tax on a second home?

The sale of a second home has tax implications, namely when it comes to capital gains (i.e., profit made from the sale of your property).

For example, if you bought a cottage for $100,000 a few years ago and resold it for $200,000, your capital gain would be $100,000. However, there are several expenses that can reduce your tax bill, such as commissions paid to a broker or improvements to the property. Maintenance costs are not eligible.

If the broker’s commission is $10,000 and you paid $30,000 to improve your property, you can deduct this amount from your $100,000 capital gain for a total of $60,000. Keep in mind that only half that amount is taxable. You therefore need to declare a capital gain of $30,000. 

You can also consider other tax strategies, such as designating your second home as your primary residence, which is not subject to capital gains taxes. A financial services professional can help.

Key takeaways

  • Buying a second home is a major investment that requires careful planning.
  • It’s essential to evaluate your borrowing capacity to determine whether you can afford a second home.
  • There are significant personal benefits to purchasing a second home.
WHAT YOU NEED TO KNOW

Eco-friendly moving tips

Moving causes pollution: consider the vehicle emissions, paint, and cleaning products it involves, not to mention all the things people throw away. Every July 1, tons of garbage is left out on city curbs and ultimately trucked off to landfills. If you’re planning an upcoming move and want to minimize your ecological footprint, here are some simple and inexpensive solutions.

Make your move more eco-friendly

You don’t have to buy costly new cardboard boxes to pack up your belongings. Grocery stores, pharmacies, and convenience stores often give their used boxes free of charge to those who request them, and some moving companies rent out reusable bins.

After you’ve finally finished unpacking, recycle your boxes according to your municipality’s guidelines, or better yet, give them to someone who will be moving soon. You’ll be giving them a second or even a third life!

While packing, you might come across things you don’t want anymore. Don’t put them out on the curb! Organize a garage sale instead—you’ll make some money and reduce the amount of waste you produce. Remember to check your community’s garage sale schedule. Some municipalities also require a permit.

If you don’t have time to organize a garage sale, donate items that are still in good condition to charity. You’ll be helping people in need while also doing something good for the environment. In addition to clothing, many charitable organizations collect toys, furniture, kitchen items, and knickknacks. Some even offer home pickup.

If you come across any old towels or clothes, don’t throw them out! Use them as rags or turn them into tawashi scrubbers, a type of knitted sponge that originated in Japan. Plus, instead of buying bubble wrap to protect fragile items like dishes and picture frames, use old newspapers and flyers.

Do you have an old TV, an empty oil container, or leftover construction materials? The best way to dispose of them is to bring them to an ecocentre. Ecocentres are responsible for picking up, recycling, reusing, repurposing, and, if necessary, disposing of waste materials. You’ll find them in most major cities, including Montreal and Quebec City.

Reduce your environmental impact on moving day

Whether you decide to rent a truck or hire a moving company, choose a large truck so that you won’t have to make multiple trips between your old home and your new one. If you have only a few items, check if there are any bicycle moving companies in your area. They’re definitely the greenest option!

Make your new home more eco-friendly

When you move into your new home, you’ll have to clean it from top to bottom. Some household cleaning products are bad for the environment, so choose products that are biodegradable, non-toxic, and not tested on animals. Buy your products in bulk or from specialty stores—or, better yet, make them yourself! You’ll find lots of easy DIY recipes online.

In addition to cleaning, you’ll probably want to paint your new place to make it feel more like home. Aim to use natural paint, which is usually free of volatile organic compounds and offers excellent durability. You can also find recycled paint in certain hardware stores. Although it comes in fewer colours than latex paint, it’s less toxic.

Need to buy new appliances? Choose ENERGY STAR certified appliances. They use less energy, help reduce your carbon footprint, and lower your electricity bills. For example, an ENERGY STAR certified dishwasher consumes about 12 percent less energy and 30 percent less water than a regular dishwasher. Ask the retailer if they’ll take your old appliances when the new ones are delivered. Most major chains do this for free and will dispose of them in an environmentally friendly way.

If you need new furniture, check out your local classifieds. You’ll find plenty of used furniture and equipment at a good price. In addition to saving money, you’ll be giving a second life to items that otherwise might have ended up in a garbage dump.

Find greener ways to renovate

Does your new home require renovations? Opt for eco-friendly materials, such as bamboo and cork.

If you need to replace any windows, choose energy-efficient designs, such as ENERGY STAR certified windows. They’ll help you lower your heating bill by up to 10 percent. To save water in your new home, replace the old toilet with a low-flush model and install a low-flow showerhead.

To encourage property owners to go green when doing renovations, the government has implemented various financial assistance programs, such as Rénoclimat (until March 31, 2021). Find out more about them!

Do your part for the environment

Follow these tips for your own move and be sure to share them with friends or family members who might be moving soon. In the fight against climate change, every small gesture counts.

Key takeaways

  • Reusing old cardboard boxes reduces pollution and will help you save on moving costs. Pass them on to others to give them a second or third life.
  • Choose a large truck to limit the number of trips you have to make.
  • Green cleaning products are a great alternative to traditional household cleaning products.
  • Choose eco-friendly or recycled paint instead of latex or oil paint.
  • Instead of throwing things away, donate them to charity, bring them to your local eco-centre, or hold a garage sale.
TIPS & TACTICS

The right way to remodel your garage

If you want to remodel your garage, you may be experiencing a number of desires or frustrations. Perhaps it’s overflowing with items you’re storing “for now.” Maybe you’d like to get more out of it by using it for a certain activity. Or maybe you just want to use it more regularly for—your car. If you’ve just moved into a new house, you might see an opportunity to design an orderly, functional space, perhaps even a pretty one, or one that’s downright spectacular.

There are a number of solutions for organizing the space and even making it pleasant if you plan to spend a little—or a lot—of time there. Here are some suggestions to keep in mind, based on your budget and how you want to use your garage.

Declutter, clean, and plan

Before you do anything else, it’s important to give the space a thorough decluttering. Sort through the junk and decide what to throw out, what to give away, and what to keep. Then classify what you’re keeping by subject (auto care, sports, DIY, indoor and outdoor maintenance, etc.).

Take advantage of this decluttering process to clean the walls and floors and do some repairs. Sometimes all it takes is a few strokes of a paintbrush to make the difference between a solely utilitarian room and a place you want to spend time in.

Then make a plan of your garage and decide what kind of storage is necessary—and possible—to organize your belongings. There are three things to keep in mind:

  • The space required for your vehicle: make sure you can move freely around it.
  • Large, cumbersome items like the lawnmower should, whenever possible, be placed in the corners.
  • Your main guiding idea in remodelling your garage should be to free up as much floor space as possible.

Vertical storage, economical solutions

To free up floor space, there’s nothing better than getting the most out of the walls and ceiling. Here are some economical suggestions to consider if your main goal is simply to have a well-organized space.

Perforated or grooved storage panels

These kinds of panels, which cost little in their basic form, can be used to store small- and medium-sized objects with hooks and brackets of all kinds, and can come with perforated baskets and other accessories. Use them to create homes for tools, bottles, and lightweight materials.

Shelves and shelving units

Installing wall shelves is a simple and affordable way to store objects of various sizes. Some of these storage solutions are especially practical because they can serve different functions, like serving as hooks. Think about getting the most out of corners as well with adapted shelving.

Into upcycling? A stack of artfully arranged old wooden crates makes an excellent mobile storage unit. Old school lockers can also be highly useful.

Not into DIY? There are a lot of affordable, utilitarian shelving units on the market that will do just fine. Some are big enough to hold large plastic containers.

Cabinets

Take advantage of your upper walls by installing cabinets for little-used or seasonal items. Considering using your old kitchen cabinets. You’ll give them a second life and save money too.

If placed lower than in the kitchen, the cabinets can provide easy access to things you use often but don’t necessarily want to see.

Other simple tricks

Magnetic strips can be fastened to the walls to hang screwdrivers, scissors, and other tools that stick to magnets.

For long, thin objects like shovels or rakes, consider tube molds (for pouring concrete) or vertically placed pallets.

If you have large opaque or translucent plastic containers, it might be hard to figure out which one has that camping lantern you need—right now. Number your containers and keep a general or detailed list at hand that tells you what’s inside each one.

Install pairs of good-sized ceiling hooks to store fishing rods, skis, and other long items, or strong pipes to support all kinds of things. Put a ladder rack on it or bicycle hooks.

A garage for the do-it-yourselfer

Got a more substantial budget? Want to use the garage for manual activities like automotive work, carpentry, or home handiwork?

The same basic principles apply. Think vertical: use the floor as little as possible and the ceiling as much as possible. There are, however, many more possibilities.

More robust and attractive systems

Perforated and grooved storage panels are also available in metal and plastic as well as multiple colours. Some grooved panels are strong enough to hang bikes or even a wheelbarrow.

Shelves can be part of a horizontal-rail wall system with hooks, baskets, and other accessories that can be placed wherever you need them. In addition, some ceiling rail systems can hold boxes, hooks, and shelving units, and storage units can be suspended from the ceiling.

Shelving units placed on the ground should be strong enough to hold heavy objects and materials.

Work tables

If you want to do manual work, you’ll need a work surface. While you can find online tutorials on making a workbench for around $100 (or more), there are some pretty interesting solutions available for purchase. These include tables with bases that offer shelf or drawer storage and wall benches that can be folded up to save space.

More ambitious projects

Some remodelling projects can become major undertakings. This is the case for automotive enthusiasts who want to convert their garage into a “temple” for their car or budding renovators who want to use their garage for a particular purpose all year long. For more ambitious projects, storage isn’t the only issue to consider. You also have to think about working to improve the comfort and utility of the space.

You may want to hire a professional contractor to handle the complexity of some projects.

Significant investments

Lighting, insulation, and heating should be primary considerations if you want to use your garage throughout the year.

You may want to take the opportunity to have your floor repaired or redo it entirely with a suitable floor covering. Mechanics may even want to install a drain or add a car lifting system.

An extension can also be added if the garage seems too small for your big dreams.

A garage without a car

Have a garage, but no vehicle?

Your imagination is the only limit to what you can do: family room, children’s rec room, artist’s workshop, music room, gym, etc. Anything is possible.

Your budget is, of course, a deciding factor for the scope of the work you decide to do.

For smaller projects, personal savings may be enough. For more ambitious projects, however, you may need to find alternative financing, such as a second mortgage. This is a common solution for renovators, as it generally offers a better interest rate than a credit card or personal loan. It may be an option if you have yet to save up the amount needed to bring your project to life. If you’re unsure about which financial institution to turn to, a mortgage broker can help you with your search and get you the right financing solution for your project.

No matter what your project’s size, it’s important to make a plan and a budget. Set aside a sufficient amount for contingencies so as to avoid any nasty surprises!

Key takeaways

  • Before you start to remodel your garage, do a major decluttering.
  • No matter what the project, free up floor space and maximize your use of ceiling space.
  • For larger projects, you may need help from a general contractor and another source of financing such as a second mortgage.

Today's rates Multi-Prêts

As of May 31, 2023

Posted rates
5.99% 1 year Fixed closed Posted rates6.79%
4.84% 3 years Fixed closed Posted rates6.44%
4.74% 5 years Fixed closed Posted rates6.34%
5.94% 10 years Fixed closed Posted rates7.49%
*Some conditions apply. Subject to change without prior notice.
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