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Your cellphone account can impact whether you’ll be approved for a mortgage.

Equifax and TransUnion are the two main credit reporting agencies in Canada. They collect all the data on your loans, lines of credit and credit cards to create your credit report and calculate your credit score. This information is then used by lenders—including mortgage lenders—to determine whether you’re a good credit risk.

Recently, both credit reporting agencies started including cellphone accounts in their credit reports. This means if you make a cellphone payment after the due date, it appears on your credit report and reflects negatively on your borrowing profile. Even worse, if you allow your cellphone account to go delinquent and it’s sent to a collection agency, not only does this appear on your report, it can also reduce your credit score. Mortgage lenders use this information to make underwriting decisions. Therefore, having a negative record with your cellphone provider can actually impact your likelihood of being approved for a loan and increase the interest rate you’ll pay.

If you’ve recently walked away from a cellphone contract, it’s a good idea to get the company to put in writing that the contract has been fulfilled and is now closed. This can help prevent any damage to your credit rating. We are always pleased to help if you want more information on how to preserve or improve your credit rating.

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What is the difference between a Consumer Proposal & Bankruptcy?

There is much confusion today regarding the difference between a consumer proposal and a bankruptcy.

They both fall under the Bankruptcy and Insolvency Act and allow you to extinguish unsecured debts but there are some very important differences as illustrated below:

Consumer Proposal:

A consumer proposal is an offer you can make to your creditors to pay off the debt as an interest free payment over a period of up to 5 years. Very often your creditors will accept less than what you own depending on your financial circumstances. Usually you will need to offer more than what the creditors would have otherwise received had you filed for bankruptcy. When you file a consumer proposal with a trustee in bankruptcy your assets are fully protected from the creditors, interest stops on your unsecured debts and creditors calls stop.

Consumer proposals can eliminate the debts such as credit cards, personal loans & lines of credit, over drafts, Tax & HST, student loans more than 7 years old, medical service plan and mortgage shortfalls.

Bankruptcy:

When you file for bankruptcy your assets are not protected from the creditors and may be seized by a trustee in bankruptcy in order to pay off your debts.  Also, a portion of your income may be taken each month by the trustee in order to pay your creditors.

Unlike consumer proposal where the agreed monthly payments are fixed, in a bankruptcy your income is monitored and payments to your creditors are increased as your income increased. Also, if you win or inherit money during the bankruptcy period or receive a tax refund then the trustee will take this to pay your creditors. These monies would be protected in a consumer proposal.

In summary, a consumer proposal allows consumers to make an offer to their creditors to pay back what they owe through a fixed, interest free, monthly payment while protecting their assets.

Article courtesy from Peter Temple, Debt Consultant from 4 Pillars Consulting


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There are stricter debt ratio standards on the way as CMHC tightens mortgage rules.

There are stricter debt ratio standards on the way as CMHC tightens mortgage rules.

We are committed to keep you informed so you can take advantage of current guidelines. If you are looking at purchasing, refinancing or investing before the new guidelines come into effect at the end of this year, give us a call so we can find the best options for you.

When CMHC tightened mortgage rules last year, among the changes were stricter debt ratios and income confirmations. For typical borrowers, these are key factors in determining whether or not you’ll get a mortgage. If you’re close to the line on debt and income, last year’s changes have made it more difficult for you to qualify. And unfortunately, things are about to get even more difficult!

CMHC has issued new guidelines for calculating debt ratios and confirming income documents. While most lenders have already been following these rules, CMHC is now closing the “loopholes” that allowed some lenders to offer easier approval for borrowers with tight debt ratios. Here are some of the rules that have been clarified:

  • If you have variable income from things like bonuses, tips and investment income, lenders must use an amount not exceeding the average income of the past two years.
  • If you own other non-owner-occupied rental properties, the principal, interest, property taxes and heat on those properties must be deducted from gross rent revenue or included in “other debt obligations” when Total Debt Service ratio is calculated.
  • For unsecured credit lines and credit cards, no less than 3% of the outstanding balance must be included in monthly debt payments.
  • For secured lines of credit, lenders must factor in “the equivalent” of a payment that’s based on “the outstanding balance amortized over 25 years.”
  • For heating costs, lenders must obtain the actual heating cost records of a property or use a set heating cost formula. This can double or triple the cost factored into debt ratios on larger properties, and reduce it on smaller ones.

Since the new rules take effect on December 31, 2013, it’s important to talk to contact us today  to find the best options with the current guidelines. We still have access to a select group of lenders who may be able to provide the mortgage approval you need. For more information, call us today at 778.893.0525!


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Be aware of your credit report

A mistake on your credit report can cost you money. It can increase the interest you pay on loans, prevent you from getting a mortgage, buying a car or getting a job.

A new 8 year American Government study was released today and indicates as many as 40 million Americans have a mistake on their credit report. Twenty million have significant mistakes.

In Canada is not different, mistakes are made every single day. There a 2 Credit Bureaus in Canada, Equifax and TransUnion. We always recommend our clients to review their credit report on a regular basis (every six months to a year) and not just for mistakes, but for potential identity theft, which could be financial devastated for an individual.

Both Credit Bureaus have free service, when you ask to a report mail to you. If you want to download your report, you have to pay for it.

Don’t risk your credit health and review your credit report often.

For more information regarding this problem read Credit reporting error costing Canadians.