Creating an Energy Smart Home

Lower utility bills. Improved comfort. Fewer greenhouse gas emissions. These are the benefits that an energy-efficient home provides. While many energy efficiency decisions are made during the construction of your home, there are several ways you can reduce your energy costs. The Canada Mortgage and Housing Corporation (CMHC) provides some insights into making your home more energy smart:

Air Conditioning Air conditioners, especially individual unit models, are often a home’s largest electricity user. The best way to lower energy use for air conditioning is to reduce the need for it. The “green” building movement promotes several cost-saving ways of cooling a home, including the use of drapes and curtains to control the amount of solar radiation entering a home, as well as the use of plants for shading it.

Building Envelope Older homes are more likely to lose heat through the building envelope than newer ones. There are, however, cost-effective ways of reducing heat loss in older buildings. For example, applying weather-stripping and caulking around windows and doorways reduces infiltration. Adding more insulation will also improve the efficiency of the building envelope – this approach means a substantial investment but the resulting savings are large.

Lighting Lighting accounts for 15 per cent of all energy consumed in a residence. A cost-effective way of decreasing such costs, without compromising safety, is to replace incandescent with fluorescent lights. Fluorescent lights produce four times as much light per watt, last ten times longer, and cost one-third as much to operate.

Heating and Ventilation Depending on location and type of fuel used, heating can be the largest component of energy use in your home. When deciding whether replacing an old furnace with a new high efficiency model is worth the capital investment, a life cycle cost analysis must be made.
Appliances Replacing old appliances with more energy efficient ones should be decided on the basis of a life cycle cost analysis. According to CMHC, replacing the typical outdated refrigerator will pay for itself in six years; that is in half or less than the expected life of the refrigerator.

Hot Water Systems Hot water systems can account for 15 per cent of total residential energy use. The most cost-effective way to decrease this energy use is to install energy efficient flow controls in showers and sinks, which reduce the volume of water without reducing water pressure.

Understanding the Five C's of Credit

When you get a mortgage, lenders carefully analyse the details of your application before agreeing to proceed with financing. Many lenders determine how likely borrowers will be to repay a loan by making use of the so-called “5 Cs of Credit” – Character, Collateral, Capital, Credit and Capacity. Here’s a brief look at each:

Character – this is the general impression you make on the lender, a subjective opinion as to your trustworthiness and ability to repay the loan. Your educational background, professional experience, length at your current employer and current residence will be considered.

Collateral – in a real estate transaction, the lender needs the assurance that, should the borrower be unable to repay the mortgage, the property that is mortgaged is marketable and can be resold. This is why lenders require an appraisal of the value of the property.

Capital – this is your down payment. From a lender’s perspective, the higher the down payment, the more likely it is that you will do all you can to keep up with the mortgage payments. Capital may also reflect your ability and willingness to save money and accumulate assets.

Credit – this is an estimation of how well you meet your credit obligations, as measured by a national credit agency. The credit agency takes information on payments on major credit cards, auto loans, leases, etc. for the last six years and produces a credit score. An Invis Mortgage Consultant can offer advice on how to make sure your credit score is as high as it can be.

Capacity – based on your financial situation, how capable are you of repaying the mortgage? Lenders will review your income level and monthly financial obligations – mortgage payments typically should be no more than 32% of your gross income.

Unsure of how you measure up against the 5 Cs of Credit? Connect with an MortgageDirect2u Invis Mortgage Consultant – he or she can review your options and present your mortgage application to lenders in the most favourable light.

Falling Oil and Gold Prices

Falling oil and gold prices (and grains and other commodities too) indicate that investors think recent high inflation numbers will subside. And falling inflation is good for interest rates. This is already starting to show up in the US long treasury yields which fallen for several days now. Falling US yields in turn usually spill over into Canada so perhaps we can look forward to another round of rate reductions this fall. Perhaps. They say the main function of economic forecasters is to make weather forecasters look good by comparison so no one wants to go out on a limb and promise lower mortgage rates just yet.

I was sitting in a coffee shop with my wife the other day when I remarked "Look at that older couple at the end of the counter. That's probably how you and I will look in ten years." And my wife said "You do realize that there's a mirror at the end of the counter don't you?" How embarrassing. Those darn reading glasses let me down again.

Purchase Plus Improvements Mortgage

If you intend to buy a home that needs some immediate upgrades, a “purchase plus improvements” mortgage may be right for you. This type of mortgage covers the purchase price of the home, plus any renovations that would increase the value of the property, such as finishing a basement or redoing the kitchen. For current homeowners, a “refinance with improvements” option may be available.

A Mortgage Direct2u / Invis Mortgage Consultant can guide you through the process:

Step 1: Mortgage pre-approvalArranging a pre-approved mortgage not only protects you if interest rates increase, it also gives you a clear price range for your new home.

Step 2: Obtain cost estimates for upgrades. Once you have found a home, you need to get written quotes from licensed contractors on the renovations you plan. These quotes will be used as the estimate for renovation funds that will be forwarded to you after the projects are completed.

Step 3: Mortgage application. When you are applying for the mortgage, your lender will add the estimated costs of the renovation into the lending agreement. For example, with a 5% down payment, your mortgage broker would apply to a lender for 95% of the “as improved” market value, which will be higher than the actual purchase price.

Step 4: Finalize purchase Your Realtor and Mortgage Direct2u / Invis Mortgage Consultant will walk you through this part of the process. The funds for renovations will be sent to your lawyer “in trust” when the mortgage closes.

Step 5: Complete upgrades The lender will "hold back" funds for the renovations until the work has been completed and inspected, at which time the contractor can be paid.

Interested in learning more about this innovative mortgage option? An Mortgage Direct2u / Invis Mortgage Consultant can tell you more about this and many other mortgage strategies.

Recent Immigrant to Canada?

Discover Mortgage Products Designed for You

It’s a common myth that if you are not a Canadian citizen or landed immigrant, you do not qualify for a mortgage. The good news is that various lenders offer mortgage products specifically tailored to the needs of non-landed immigrants. While most financial institutions traditionally have insisted that new immigrants provide a down payment of at least 20% to 35%, there are now lenders who offer qualifying new immigrants (or those who have been transferred to Canada by an employer) mortgages which feature a much lower down payment.

New to Canada? Contact a Mortgage Direct2u / Invis Mortgage Consultant today to get advice on how you may qualify for specialized mortgage products aimed at new immigrants. You may be closer than you think to the rewards of Canadian home ownership.