New Mortgage Rules in Canada

We have all heard about the new mortgage rules that came into effect recently. They are aimed at strengthening the Canadian mortgage industry and protecting its stability. These changes would have had a significant effect on the housing market.

What changed?

The most notable change in mortgage rules is that the amortization period for CMHC’s insured mortgage loans (supported by the government) has been reduced by 5 years (from 30 to 25 years). This means that mortgages will be repaid faster by borrowers, but their monthly payments will be higher (see image below).

Canadians who would like to refinance their homes are also affected by this new regulation. Home equity loans can only be offered for up to 80% of the value of a property, down 5% from the rules prior to July 9th. ABD (gross debt amortization) and DTA (total debt amortization) are ratios used for qualifying for mortgages. Their limits were changed to 39% and 44% respectively.

Finally, buyers who are looking for a mortgage of one million dollars or more must provide a deposit of at least 20%. In addition, no mortgage insurance from CMHC will be provided for these loans.

Why now?

These new mortgage rules were put in motion to slow down the Canadian housing market. These actions are designed to ensure the long-term stability of Canada’s housing and mortgage industries. They also aim to provide long-term savings for Canadians (Canadians save on mortgages with shorter amortization periods, even though their monthly payments are slightly higher).

I’m looking for a first mortgage, what can I do?

These new rules have tightened the mortgage market and, now more than ever, we encourage you to seek financing through a mortgage broker. Mortgage brokers offer many benefits to homebuyers as they have access to lenders, non-advertised products and rebates.

I already have a mortgage, how does this apply to me?

The new mortgage rules apply to you if you transfer your mortgage, refinancing or renewal.

Old mortgages with longer amortization periods (30 or 35 years) can be renewed by lenders, as usual, if the mortgage terms remain the same (if you want to change lender, they may not be able to not to qualify you). If the borrower wishes to increase the amount of his loan, the new rules will come into effect.

To learn more about the new mortgage rules, talk to one of our mortgage specialists. We can help you plan your next step and save even more.

Mortgage acronyms demystified

The average consumer is often confused when dealing with professional creditors because they tend to use a multitude of acronyms. Unfortunately, this confusion and lack of understanding can cost you in the future.

In practice, these acronyms are used so often that almost no one uses real words. The consumer often feels that creditors speak another language. If you are about to make one of the most important purchases in your life, your home, it is important to understand what the creditor is telling you. So, the whole process will run better and without frustration on your side.

Here are the 10 most common acronyms you need to know:

  • PHTV (ARM): Note that Variable Rate Mortgages offer you interest rates that will fluctuate throughout your mortgage, unlike fixed rates. Usually, the consumer can opt for variable rates for a period between 3 and 10 years. Subsequently, a new arrangement will be made. Also, note that your monthly payments will vary based on variable rates.
  • DPR ( DTI): Debt versus income is the part of your income that is allocated for the repayment of debts such as student loans, credit cards, etc. Usually, creditors request a debt ration of less than 55% of your monthly income ( note that each creditor requests a different rate )
  • EBF (WDM in English): A good faith estimate is an important document that contains all significant details of your loan. These details include loan type, amount, closing costs, the cost of a credit report, the cost of the escrow, the valuation value, and so on. The creditors are obliged by law to provide you with this document.
  • MCH (HELOC): The Mortgage Line of Credit is a loan or line of credit that is backed by an existing mortgage or the residual value of your home.
  • LDE (LOX): A Letter of Explanation is a letter explaining to you the negative aspects that have been found in your credit history and application. Among the details that could have a negative impact on your chances of getting a loan, there are late payments for example.
  • RPVT (LTV): The Total Value Loan Report calculates the value of the loan in relation to the market value or the purchase price of the property, whichever is lower, expressed as a percentage. Usually, creditors are looking for an RPVT of 80%. Note that some creditors offer alternative solutions to people who wish to increase their RPVT.
  • CAH (MIP): The cost of mortgage insurance is a charge that is added to your monthly bill. This is a form of insurance for the creditor who loaned money to people whose RPVT was above 80%.
  • PITA (PITI): PITA stands for Main Party, Interest, Taxes, and Insurance. It’s a kind of mortgage payment that includes all the other acronyms.

When you are looking for a home, it is better to be prepared. During the process, you will have to fill out many forms, read a lot of documents, sign a lot of papers. If you go ahead, the whole process will be better. Although we suggest that you seek the assistance of a professional during your mortgage process, we also suggest that you do not hesitate to contact your creditor and ask him all the necessary questions. They are here to help you!

Real estate loan is the time to renegotiate!

Interest rates applied to mortgages continue to fall. Indeed, despite a slight increase last spring, rates start again down since July. Given the current economic situation (low inflation, monetary policy stimulus from the European Central Bank …), this decline will no doubt be in the long run.

This low-interest rate is good news for future real estate buyers, who will be able to finance their investment by borrowing at a lower cost. This also represents an opportunity for those who have a current home loan. So, it’s time to renegotiate your loan terms with your banker. Currently, this query is commonplace. Most of the time, you will get a proposal from your bank advisor.

In parallel, you can solicit the competition as part of a loan buyback. The main interest of the renegotiation is the circumvention of the costs generated by a new loan offer (credit redemption by the competition). If you accept the renegotiation offer made by your banker then you will benefit from a lower interest rate on your mortgage, with a positive impact on the duration or the amount of your monthly loan. The costs to be incurred in the context of a renegotiation are less than in the case of a repurchase of real estate credit by the competition. Nevertheless, the competition will probably offer you better conditions, ie a lower interest rate. For you to earn money, it takes on average one point difference between your current rate and the proposal of the competition.

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Conversely, it should be noted that the last part of repayment (the last third, the last seven years for a loan of 20 years), the majority of the remaining periodic repayments consist of capital since the amount of interest is declining. In other words, we advise you more renegotiation if there is little amortization year.

Finally, think about comparing the costs associated with a credit buy-back by the competition. In fact, assume that the bank will ask you to house your income and savings in parallel with this credit redemption. It is therefore essential to know the costs associated with current operations and services (checking account, credit card, transfers or even insurance).

Guide to automatic savings and automatic payments

Whether you’re on vacation, working constantly, or just busy with life, it’s so easy to miss a payment. This may seem trivial at first, but after the fifth or sixth late fee, you might get fed up. Automatic payments can help manage your finances and avoid late fees by paying your bills on time. On the same principle, automatic savings can help you manage your funds for the future. If you have trouble saving, setting up automatic savings will save you money easily because the money is automatically set aside for you. While guaranteeing you money for the future and on-time payments, savings and automatic payments are a useful tool for moving towards a better financial future.

Automatic payments

If your credit rating is low and you are rejected by the loans, it may be time for you to set up automatic payments. These are ideal and easy to implement. They can be beneficial for your financial needs, your credit rating, and your credit history. With all the expenses and deadlines, it can be difficult to pay each of our accounts on time. One way to help solve this problem is to set up automatic payments. Your bills will be continuously billed to your credit card or taken from your checking account each month, on a pre-established date. All of your monthly expenses will be paid automatically, without you having to do anything. By paying your bills on time, you will be assured of never missing a payment again and going towards a good credit score. The following information will provide you with the advantages and disadvantages of automatic payments


  • On the practical side – By paying your bills automatically each month, you will not have the pressure to remember to pay on time
  • Travel Rewards-By paying your credit card bills automatically, these can give you more points for traveling. The accumulation of all your bills, every month, can lead to hundreds of points, which is enough for a small trip.
  • Improve your credit rating by paying your bills on time, your credit rating will improve. Your minimum amounts will be transferred automatically and you should not forget to make a payment. This will help you improve your credit rating.
  • Respect for the environment-Automatic payments involves online transactions and the elimination of paper bills and checks. In addition, you will save money while no longer buying stamps.
  • Save money-Paying your bills online means you no longer have to buy stamps, checks, envelopes, and gas to get to the post office.
  • Less chance of stealing your identity-Making your transactions online means you no longer have to post personal information. This will lessen your chances of stealing your identity through the mail.


  • Hidden Fees-Some companies will charge you a fee to make automatic payments. However, in reality, these automatic payments save businesses money. So, if that’s the case, do not pay any fees and pay your bill with a check.
  • Losing track of your expenses-Since everything is paid online, it can be easy to forget what you paid and when. Keeping your monthly expense due dates on a schedule can help prevent unseen banking errors.
  • Stop Payments-It’s very easy to start making automatic payments, but it can take a lot longer to stop them. If an online option is not available to remove automatic transfers, contact and inform your merchants or service providers at least 2 weeks in advance, before the next scheduled transfer.
  • This can be done verbally, but some companies may request your request in writing. If you only want to stop some payments, not all, contact the payments companies that you want to stop, and they will inform you about their cancellation procedures.
  • Overdraft fees- Even if the money is transferred online, you should always make sure there is enough money in your chequing account to cover automatic payments. If not, you will be charged expensive bank overdraft fees.
  • Increasing a credit card balance-Although your bills are billed directly to your credit card, it is important to pay your credit card regularly. If not, you could be left with an expensive credit card debt, which could affect you for years. To prevent this, calculate how much has been paid automatically and send this amount to your credit card each month.

As you can see, there are positive and negative sides to the use of automatic payments. On the one hand, you will not have to remember to pay your bills. Whether you are on vacation in the Bahamas or taking care of a newborn baby, your bills will always be paid on time. On the other hand, automatic payments mean that you give access to your banking information, which makes you lose some control. It can be more risky and tempting for the companies you are dealing with to take advantage of and add “accidental” fees. If you do not always check your payment history, you could pay more than you should. For example, if you forget to cancel your gym membership, you may have to pay for a subscription you do not want.

In addition, variable rate invoices can be difficult to track because their amounts vary each month. If automatic payments are in place, you may be overloaded. If the amount is higher than you expected, you could end up with overdraft fees because you did not have enough money in your account to cover the amount. Thus, automatic payments may seem like a convenient and easy way to pay bills, but it can also be a trap.

Automatic savings

Saving is like being on a diet. We all hate it, but we know you should do it. And when we do, we see a lot of positive results in the longer term. Just like dieting, saving can help you create a long and healthy financial history and help you achieve your financial goals. Saving is, however, difficult when you have a lot of different accounts and expenses to pay. On the other hand, if you set up automatic transfers, your money will be distributed over and over again in different accounts without you having to do anything.

There are two ways to do it. First, you can create an automatic transfer from your checking account to a savings and investment account at your local bank. You can also have a portion of your paycheck deposited directly into a retirement account or savings account. See the benefits of using an automatic savings transfer service.


  • No effort – Once automatic transfers are created, there is no need to think about saving money. You will have a guaranteed amount saved each month.
  • Spend less than you usually do – Creating this type of automatic savings involves letting your savings grow unattended (because they eventually accumulate over time). In addition, if you make your transfers right after receiving your paycheque, you will not accidentally spend all the money you are supposed to save.
  • Save in separate accounts-Setting up automatic savings allows you to transfer your money to different accounts. Whether it’s a retirement fund, an emergency fund or just money for a vacation, automatic transfers allow you to contribute to each account each month. With a constant amount being put into each account, it is guaranteed that you will have enough money for emergencies, retirement, and vacations. It may take longer because of the number of open accounts, but it will be easier. You will not forget to transfer money to an account and do not lose sight of your goals.

As you can see, there are no disadvantages to making automatic savings transfers. This is the most effective way to save your money. This will greatly increase your savings and help you reach your financial goals. With this way, you are guaranteed to have enough money saved for all kinds of amazing experiences you want to accomplish during your life.

To determine which, if not both, apply to your finances, look carefully at your expenses, your income, and your budget. It depends on your financial situation and how you manage your finances. We strongly suggest that you implement automatic savings, but not always automatic payments. Saving automatically is always a good idea, but automatic payments can cause financial problems if they are not handled properly.

Mortgage term vs. mortgage amortization

When you become a homeowner, there will be many home-related expenses that you will have to pay regularly, from when you start paying your mortgage until you decide to sell your home. What is the most important expense? The mortgage itself. No matter what you do at home, whether you mow the lawn or simply sit in front of the television, the financial aspect of home ownership should always be somewhere in your head.

A mortgage allows a Canadian consumer to buy a house and transform it without having to spend all his savings. Instead, the consumer will pay the house in monthly installments for a number of years (usually 25-35 years). This process is known as depreciation. However, as part of depreciation, homeowners will also have a mortgage term, at the end of which they will have a chance to renew their mortgage loan. In fact, there is only one difference between the mortgage “term” and depreciation. So we’ll talk a bit about this difference, as well as the mortgage payment process.

Make your mortgage payments

Before looking at the differences between the term mortgage and the amortization period, let’s talk a bit about how your mortgage payments will work. Be aware that the mortgage process, interest rates (variable or fixed), lump-sum payments (if permitted by the lender), and payment methods vary depending on the specifications of your chosen lender. So, while doing research on lenders, be sure to ask them about the different options they have to offer.

In order to start making regular mortgage payments, you and your lender will likely make a recurring direct transfer, in which the funds will be drawn directly from your bank account each time your mortgage payment is due. The process is quite simple, especially if you already have an open bank account with the same bank. If you decide to do business with a new bank or lender, you will be told how to make your payments as efficiently as possible.

Some lenders may also allow you to make lump-sum payments at specific times during the term of your mortgage. This means that homeowners will be allowed (usually after one year) to make a one-time lump sum payment towards their mortgage settlement. A lump sum payment will not directly affect your monthly payments, but it will decrease the total amount you owe and, therefore, the length of your amortization period. In simple terms, a lump sum payment will help you repay a mortgage loan faster and save you interest.

Know that almost all lenders do not allow borrowers to make lump-sum payments when they want and if this is possible you will probably have to pay a penalty fee. The reason for this is that when you sign a mortgage agreement with a lender, you agree to pay him a specific amount of interest, which means that the lender will make a specific amount of money on your mortgage. If you make several additional lump sum payments and pay back your loan faster than expected, your lender will earn less money with your mortgage.

What are accelerated payments?

Because of the financial convenience, this provides, most Canadian homeowners will choose to repay their mortgage in monthly installments, for a total of 12 payments per year. To simplify things, let’s say your monthly mortgage payment is $ 1,000. This means that with a typical monthly payment, you will be repaying $ 12,000 in mortgage payments a year, spread over 25 to 35 years. So if your mortgage is $ 300,000, you should be able to pay it back in 25 years. Just be aware that in Canada, real estate rates have been rising steadily in recent years. This figure is somewhat realistic considering the interest costs and variable rates of each province or territory.

However, by choosing to make “accelerated” payments, you will be able to reduce your amortization period. Essentially, by increasing your payment rate, each year, you will add extra money to pay off your mortgage. You can choose to make accelerated weekly or bi-weekly payments. With either of these choices, you will be able to breathe a bit with your mortgage payments based on the number of weeks in a year rather than the number of months in a year. This will increase your pay rate and decrease your depreciation.

What is the best way to pay off your mortgage?

There are five mortgage payment options to choose from. In order to make this simple, we will use the same example for all options. Let’s say your total annual mortgage payment is $ 12,000.

Monthly: You divide your annual mortgage payment by the number of months in a year. This means that with this option you will make a mortgage payment of $ 1,000 a month. Because of the convenience that this option offers, monthly payments tend to be the payment option that Canadian homeowners prefer.

Weekly: There are 52 weeks in a calendar year. So by choosing this option, it means that you will make 52 mortgage payments a year. For this option, you divide your annual payment by ($ 12,000) by 52, which means that your weekly payment will be approximately $ 231.

Biweekly: With this option, you will make mortgage payments every two weeks, rather than weekly or monthly. If your annual mortgage payment is $ 12,000 and there are 26 2-week periods in a calendar year, divide your annual payment by 26 and you get approximately $ 462 to pay all two weeks.

Accelerated Weekly: With an accelerated payment rate, you’ll save on interest over time and pay off your mortgage faster. So you have to take your monthly payment of $ 1,000, and divide it by 4, the number of weeks in a month, and then multiply that by 52, the number of weeks in a year. This means that you will make 52 mortgage payments of $ 250 in one year for a total of $ 13,000.

Essentially, you will make an additional $ 1,000 on your mortgage in one year and pay it back faster.

Bi-Weekly Accelerated: This type of payment is roughly equivalent to an accelerated weekly payment, but instead you will, of course, make your payments every two weeks, which can sometimes be easier to manage.

What is the difference between the term of a mortgage and depreciation?

As mentioned above, there is only one major difference between the term mortgage and the amortization period: it is the duration of these.

Mortgage term

A mortgage term refers to the period during which you will mortgage a home through a single lender, paying a specified rate (principal and interest) while complying with the various other terms and conditions listed in your contract. A typical mortgage term can be from 6 months to 10 years. During this time, you will need to make your mortgage payments to avoid defaulting. The shorter mortgage terms will have a better rate than the longer ones, but again, it depends on your lender. Once your mortgage term is over, you can choose to request a contract renewal with the same lender, and manage the changes to bring in your rate as well as the new terms, while paying the remaining principal on your home. If you are not satisfied with your current terms or if your lender refuses your renewal request for any reason, your mortgage term will end and you will be able to go to another lender.

Mortgage amortization

The amortization period refers to the term of the full mortgage, which is the time it takes to pay the total cost of the home. Over the years, by making mortgage payments, you will slowly amortize the cost of ownership. In Canada, a normal amortization period depends on the amount of the down payment you paid and whether you had to buy mortgage insurance or not. It usually takes 20 to 35 years to pay off a mortgage. If your mortgage is considered “conventional”, it means that you have made a down payment of 20% or more for the home, and you do not have to purchase mortgage insurance. However, if your mortgage is a high ratio, your down payment should be at least 5%, but less than 20%. High ratio mortgages are generally more affordable, depending on the price of the house. However, since high-ratio mortgages are riskier for the lender, borrowers must purchase mortgage default insurance in the event that they are unable to make their payments.

In 2012, the maximum amortization period allowed for high ratio mortgages was 25 years and 35 years for conventional mortgages. In Canada, the best example is a five-year mortgage term and a 25-year amortization period. Once the amortization period is over, you will have paid for all of your home and the associated costs. Congratulations! The house is officially yours …

Are you ready to buy a house?

Buying a home or condo is one of the most important decisions a person will make in their life. This decision will influence your future for the next 25 years at least. Taking this into consideration, today’s Canadians must weigh the arguments and decide whether they prefer to buy a house or whether they prefer to continue renting.

First Deposit

To buy a house, it’s not enough to simply go to the bank and ask for money. You will need to save money before applying for a mortgage. You will have to make a first down payment of 20% of the total price of the house because the banks grant mortgages only for a value of 80% of the price of the house. If you have less than 20% for your down payment, the bank will ask you to buy mortgage insurance, which will increase the price of your mortgage by 4.75%.

Mortgage Closing Costs

Closing costs include the legal and administrative fees to officially transfer the property on your behalf. These fees include land transfer tax and all other fees charged by the notary, insurance, etc. Make sure you have an insurance agent involved in this process from the beginning because some homes are not insurable.


The finalization of the mortgage requires a signed copy of the sales contract, the verification of the deposit, the names and information of all lawyers, builders, insurers and real estate agents involved in this transaction, as well as a legal description if it’s possible.

Credit score

Before you offer a loan, the banks will analyze your credit score. However, they do not look only at the number associated with it, but also the history of your payments, the types of credits you have, etc. If, for example, you only have credit cards for small loans (less than $ 1,000), you may not qualify for a mortgage, even if you make all your payments. If you want to get a mortgage, you want to have an impeccable history for the last two years and have at least $ 1,500 credits and more.


In order to convince the bank of your creditworthiness, you will have to demonstrate that you have held a job for the last two years. Pay stubs, a letter from the employer and your tax returns will be required to obtain the bank’s approval.

Autonomous employee

Individuals who are self-employed will require income statements for the last two years. This history must be approved by a certified accountant. Self-employed people are, in the eyes of the banks, somewhat riskier investments and, therefore, it may be more difficult for them to obtain loans.

Solidary Mortgage

Two people can sign a common mortgage to offset the price of buying a house, thus becoming solidary debtors. In this case, both people will need to be approved for the mortgage, with their combined income and credit history being the deciding factor. However, if one of the people becomes insolvent, the bank may ask you to make the payment in the place of the other party.

Are you ready?

Buying a home is an important decision that includes a lot of details to consider. Unless you are able to save enough money to buy the house directly, be sure to evaluate the advantages and disadvantages of the mortgage.

Reverse mortgage scams

At first glance, a reverse mortgage may seem like a great idea, especially for eligible seniors who need cash and want to stay in their homes for as long as possible. You will have access to the equity of your home but will not have to make any kind of payment, or pay interest. However, this type of loan must be repaid if you sell your house or if you die. Let’s examine the pros and cons of reverse mortgages and see how some fraudsters take advantage of unsuspecting seniors.

What is a reverse mortgage?

A reverse mortgage is the opposite of a typical mortgage in that you are not required to make regular payments. With a typical mortgage, you borrow a specific amount of money. You pay interest to borrow money, make regular payments to repay the loan, and acquire capital when you finish paying the mortgage.

This is not the case for a reverse mortgage. With a reverse mortgage, you must already own a home and have accumulated a lot of equity (equity is the share of the value of a house without debt) . You are then loaned a specific amount based on the equity you have, either in several phases or in a lump sum. You will not need to make any payments and the accrued interest will be added to your loan balance. This means that your mortgage will increase steadily over time instead of decreasing. Once the homeowner dies, moves or the house is no longer their principal residence, the reverse mortgage must be repaid. As a rule, this is done by selling the house.

Prerequisites for a reverse mortgage

Mortgages are not available for everyone and they are not a good option for everyone either, regardless of whether or not you qualify. Here are some things you should keep in mind when assessing whether or not a reverse mortgage is right for you and your financial situation.

  • In Canada, reverse mortgages are only available for those 55 and over.
  • You must already own a house.
  • You must have paid a large portion of your original mortgage and therefore accumulated equity.
  • The assessed value of your home and its location will be taken into consideration.
  • In Canada, you can only access a reverse mortgage up to 55% of the value of your home.

Benefits of a reverse mortgage

While a reverse mortgage may not be the best option for all homeowners, there are actually several benefits that you can benefit from if you are able to qualify.

1. You will have no regular loan payment to make.

2. You can transfer part of the value of your home in cash without having to sell or move.

3. The money you receive through a reverse mortgage is tax-free.

4. The money you receive will be considered income but will not affect Old Age Security (OAS) or the Guaranteed Income Supplement (GIS) you receive.

5. You remain the owner of the property.

6. You will have three options to choose from when deciding how you want to receive your money:

  • A lump sum payment
  • Payments planned to provide you with a regular income
  • Or a combination of these two options.

Disadvantages of a reverse mortgage

As with any type of financial product, there are disadvantages.

Depending on your lifestyle and financial situation, consider the following disadvantages before making your final decision.

  • This type of mortgage usually comes with a high interest rate.
  • The equity you have accumulated in repaying your mortgage will decrease while the interest on your reverse mortgage will increase.
  • If you die or decide to sell your home, your reverse mortgage plus accrued interest will have to be repaid within a specified time.
  • Reverse mortgages are very expensive, including:
    • A high-interest rate
    • Property Assessment Fee
    • Registration Fees
    • Closing costs
    • Legal fees
    • You will have a penalty if you sell your home in the first three years following the acquisition of a reverse mortgage.

Reverse mortgages and scams

A reverse mortgage is a perfectly legal product that can help people in specific financial situations, can get them the money they need to cover an unexpected expense or even help in the cost of daily living.

Unfortunately, there are people who have decided to take advantage of those who need it and have created several reverse mortgage scams. Let’s take a look at three of the most common reverse mortgage scams.

Illegal information fees

It is important to know that there are several types of fees associated with the application and approval of a reverse mortgage, namely valuation, legal, closing, and administrative fees. But when a reverse mortgage provider asks you to pay fees to get information about the product they provide, it is a scam.

Transfer of title

Scammers seeking to take advantage of naive elders will work to artificially inflate the value of their home or convince them that their home is worth much more than it really is. Once they have done this, the crooks will then help the owner to get approved for a reverse mortgage, to convince them to transfer title to them.

Fraudulent document

Scammers often come forward as legal representatives of financial institutions and ask seniors to send documents and even money to help approve the reverse mortgage. A legal reverse mortgage provider or financial institution will never do so, all documents or fees will only be processed after loan approval.

Seven toxic habits with the money you should leave

Experts advise not to be guided by emotions

  • Loans to family and friends can damage relationships and pockets


Bad habits related to money can be exceptionally difficult to break since in many cases they are associated with a problem of ignorance about personal finances.

Even when we have the best intentions and a strong financial plan, these ingrained rituals will take us out of our way. For this reason, MarketWatch has published a list of the seven bad economic habits that we must break.


Using purchases to deal with other problems is usually common, but emotional impulses do not fix anything

Using purchases to deal with other problems is common, says Gretchen Cliburn, director of financial planning for BKD Wealth Advisors, in a statement to MarketWatch. But emotional impulses do not fix anything, but, on the contrary, tend to make things worse.

To avoid making impulsive or emotional purchases, a series of basic rules must be established. For example, buy things only from a ‘wish list’ that you have previously done in a quiet moment, not when you try to distract yourself from anxiety or sadness. It also advises waiting 24 hours before going ahead with an unplanned purchase.


Although it is admirable to give help to others, leaving money to friends and family can damage your pocket and your personal relationships. It can be difficult for the other person to return the loan, which could create conflicts and resentment.

Instead of offering a loan, there are many ways to help a friend in a situation of need and maintain your relationship: find ways to help your friend find solutions to their problems that do not involve giving money. For example, you can offer to take it until the car is fixed or suggest ways to reduce your expenses.

If you still want to offer money, consider it a gift. This way, you will not feel resentful when your friend buys clothes and shoes instead of giving it back to you. If you can not afford to give money as a gift, it is better not to lend it.


For some people, being able to pay for a friend’s dinner or a round of drinks is a source of pride. But if you are going to go into debt or a very large expense, you have gone too far and can cause your family and friends just want to go out with you because you invite them.


Many people measure success by the size of their homes or the cars they drive, but this assumption is false. Big houses and expensive things only indicate how some choose to spend their money, not how much they have, says Cliburn.

The first thing is to determine what is important and set goals to ten, twenty or even fifty years. Maybe you want a house in a certain area or a comfortable retirement. “Once you’ve identified what is most meaningful to you, make spending decisions based on it,” he recommends.


Everyone has to pay bills every month, but it is up to each one to decide what they spend the money that remains. Choosing to spend everything can easily become the norm, which usually means that there is no cushion for contingencies or retirement savings.

When someone spends everything they earn, they usually do not have a budget, says Derek Gabrielsen, an adviser to Strategic Wealth Partners, who calls this behavior “the big mistake people make.” Thus, he recommends writing a budget that includes monthly provisions for emergencies and for retirement.


At the end of 2015, the debt of the Americans with the credit cards reached 900,000 million dollars, according to the analysis of CardHub from the data of the Federal Reserve. If you have become accustomed to living with debt on your credit card. To break the cycle of indebtedness, one must stop using credit cards and mark a strict budget.


If you avoid looking at your credit card charges or checking account balances, you are living in an ‘economic coma’. You may think that, if you really do not know how bad it is, the problems will go away, but it is not true.

It’s time to ask for help from friends or family, a counselor or a financial planner to evaluate your financial situation and develop a plan for you. To begin, make sure you know the amount of debt you have or your monthly commitments.

Missing mortgage payments and foreclosures

Missing a mortgage payment or being unable to finish repaying it is obviously the last thing you want to happen, but in reality, financial problems arise and sometimes managing them can be difficult. You should not, under any circumstances, ignore the problem if you find yourself in such a situation and you can not make your mortgage payments. Banks are often less willing to renegotiate your mortgage if you ignore them. Instead, do the following:

Communicate immediately with your mortgage lender; even if you are not 100% sure that you will not be able to make your payment.

  • Be as honest and open with your lender as possible, then tell what’s going on so they can find a plan to help you.
  • If you are given another chance, work as hard as possible to take full advantage of this second chance.
  • Cooperate with everyone you do business with.

Whatever the reason, if you can not make your mortgage payments, you must be prepared to hear the word entered. Although most lenders do not usually want to go through the foreclosure process of your home, if you do not make your mortgage payments, it’s their legal right to do so and they will. Instead of waiting for the inevitable to happen, you should take responsibility, inform yourself and learn about the process of entering. Once you understand the process as a whole, you may be able to know not how to avoid it but at least how to make the process easier for everyone involved.

What is a seizure?

A seizure is a legal proceeding taken against a mortgage borrower who stops making payments on his loan. Since the home he bought with a mortgage acts as collateral for the mortgage, it can be taken back and sold by the lender if the borrower stops making payments. Since foreclosure is a legal process, the lender must first obtain court approval to repossess a home. Once the house is repossessed, it is usually sold so that the lender can recover the money he is owed.

The process

A seizure is a serious problem and it could happen if you do not make your mortgage payments on time, but it’s important to understand that the foreclosure process will not happen right away. Here’s what you can expect once you stop making your mortgage payments:

  • You do not automatically lose your home after a single missed payment.
  • Your lender will contact you immediately. He will want to help you understand how to continue making payments.
  • A seizure is a lengthy and expensive process; therefore, your lender will probably not offer it right away.
  • You will start receiving letters from your lender. These letters usually come after 30 days, 60 days and 90 days.
  • Once you have reached 90 days without being able to make your mortgage payments, you will be late.
  • If you do not want to get in touch with your mortgage, you should expect the foreclosure process to begin.

In Canada, the seizure process varies from province to province. It is therefore important that you take the initiative to be informed about this and how seizures are made in the province where you live.

Generally speaking, in Canada, lenders are able to recover their money in two main ways; you should expect to go through one of the following procedures.

Judicial Sale

Judicial sale or judicial seizure is heavily involved in the legal system; a seizure is conducted under the direction of the Canadian judicial system. The process is usually slow and can take up to 6 months. Once the foreclosure order is given to the lender, the property of the house is automatically transferred to the lender. This means that you will receive all the capital.

The Judicial Sale or Court Seizure is used in the following provinces:

  • British Columbia
  • Alberta
  • Saskatchewan
  • Manitoba
  • Quebec
  • New Scotland

Power of sale

This process begins when the lender sends the borrower a notice and provides him with a 35-day redemption period. During these 35 days, the borrower can start making payments again and get back on track. If a borrower is able to do so, the power of sale will not be continued, but it will have to cover some costs associated with the power of sale.

The wind power allows the lender to sell the house he or she has seized without court involvement. This process is much faster than the court seizure.

The power of sale is used in the following provinces:

  • Newfoundland
  • New Brunswick
  • Prince Edward Island
  • Ontario

Dealing with an imminent seizure is not easy, but if you get ready, get in touch with a mortgage lender and are as cooperative as possible, you will go through the process.

When to check the mortgage

32% of Spaniards pay a mortgage. And with today’s low interest rates, many wonder if it’s time to change it or if it’s worthwhile to anticipate payments

After a long time of not lending money, the banks return to make publicity about mortgages and the statistics of the INE indicate that the average interest of the mortgage loans on houses falls and is 12% inferior to the one of a year ago. These circumstances lead some people to think again about their mortgage and to question if it will not be a good time to review it, if it would be worth looking at what offers are there to change it to another bank, or even if they should dedicate the money they have saved to reduce it now that interest rates are so low.

The financial advisers are very clear: the current mortgages are more expensive than those before the crisis, so it is difficult for a person who has a mortgage contracted before 2007 and linked to the Euribor is interested in changing it. “Before the crisis, mortgages were offered with an interest rate of Euribor plus a 0.5 and now the differential is 1.65 or 1.75, so you will not be able to save interest by changing mortgages and you will also incur expenses for the change” , explains the head of economic issues of the consumer association Ceaccu, Fernando López .

Jordi Paniello , president of the Association of Investment Advisers, Financing and Judicial Experts ( AIF ) explains that the mortgage exchange may be able to compensate in recent mortgages, with higher spreads than the current ones “because in the installments of the first years they are paid many interests and little capital and the savings achieved with a lower interest can offset the costs of change, but you have to get the numbers right “. In this regard, he emphasizes that the costs of changing mortgage conditions are different if a new one is canceled and contracted if a subrogation is agreed, an operation in which the loan is maintained but the creditor entity is modified and with which Registration and notary fees are reduced. The president of EFPA Europe, the European association for financial and property planning and counseling, Josep Soler, ensures that when you receive an attractive offer from an entity to change your mortgage you must ensure “that in addition to giving you better terms it covers the costs of the change”. In any case, improving mortgage conditions does not always require a change of entity. You can negotiate a change in the interest rate, the pending amount or the term with the entity with whom you have contracted the loan and if an agreement is reached, make a novation, although this transaction is also usually accompanied by processing fees. and commissions, which are higher if capital is modified (1% on outstanding capital) than if only the term is changed (0.1%)

There are also those who at this time of the year wonder if it is worthwhile to allocate the money they have managed to save to lower their mortgage in order to pay less interest. The experts are not unanimous in their answers. Paniello, for example, thinks yes, that it is better to get rid of the debt as soon as possible because in the future the interest rates will be higher than the current ones, so he advises a partial amortization aimed at reducing the term of the mortgage. On the other hand, Soler and López believe that with interest rates as low as the current ones it is not time to write off. “If your mortgage is old and the conditions are good you will be paying a one and a few percent interests; if you invest the money that you would spend to amortize in another financial product that offers that return, you already have interest paid, and if you count that you also take advantage of the tax deduction for home purchase, the final yield is higher, “they explain.

The specialists of the Organization of Consumers and Users ( OCU ) consider that the convenience of an early amortization depends to a large extent on whether or not the person can be deducted in his income statement and the conditions of each loan. “If the consumer is deducted for home purchase, the best option is to pay as much up to the limit set (9,040 euros per taxpayer per year) and invest the excess in an investment product; and if the conditions of the loan are not good, before amortizing in advance it is worth trying to renegotiate it or change bank, “they indicate. In this regard, they warn that there are entities that subject the partial amortizations to which a high amount is canceled, in which case the amount that one may wish will not be amortized each year “and the negotiation must be directed to request that they allow amortizations of any amount and that they reduce or eliminate the commission for amortization “. On the other hand, the OCU advises in advance to advise the bank that an early repayment will be made to avoid the risk of being attributed to the following year and the tax deduction cannot be used well. And for those who pay an insurance that covers the return of the loan if the owner dies, remember that the company must be notified of the early repayments that are made because as the insured capital will be lower, the premium will be cheaper.

In any case, the decision to amortize or not mortgage is subject to the personal circumstances of each one. “If you have a temporary contract and now you have money, it is very likely that you will be interested in getting rid of the debt as soon as possible; on the other hand if you foresee that in two or three years you will need money to face expenses or investments, it is better not to amortize the mortgage because the loan that you will get later will be much more expensive “, explain Paniello and Soler.

And for those who think about hiring a mortgage, the unanimous recommendation is to read the fine print of the contract to have clear the commissions and clauses that will apply. The floor clause, which limits what the fee can lower if interest rates fall, is no longer allowed. But you should also look at the formalization expenses (appraisal, agency, notary, registry), in the opening commission, if there is a study fee (usually a percentage of the loan amount) if they will charge for early cancellation or partial amortization if they demand to contract other financial products … The consumer organizations remember that the only insurance that the mortgage holder is obliged to contract is fire, the rest (home insurance, life insurance, etc.) are optional. They also note that to compare the cost of mortgages offered by different banks must be fixed in the APR (annual rate equivalent) and not in nominal interest, and emphasize that accounts intended solely to pay the mortgage installments can not have commissions.