Friday, May 30, 2014

TMG National Breakfast Club Day – what a success!

By Mark Kerzner, President, TMG The Mortgage Group

In the early Fall of 2013, I had the pleasure of meeting Daniel Germain, founder of Breakfast Club of Canada ( Over the course of our meeting, Daniel shared his personal story with me -- to say I was touched was an understatement.  In his passion and commitment to helping others in a number of countries around the world, Daniel then focused his attention to his own backyard right here in Canada.

What surprised me during our conversation was that he was also ‘interviewing’ us (TMG) to ensure we were a suitable partner, with shared values. He asked a lot of questions about TMG -- our history and our people. I believe one aspect that may have impressed him was not only our desire to raise money for his organization, but also our interest in getting involved in the school communities across the country.

As soon as we ‘officially’ kicked off our national commitment to support Breakfast Club of Canada (BCC), TMG’ers were volunteering in local schools and raising money through regional events. As well, our passion for this organization has encouraged others in our small business community, including lenders, suppliers and customers, to get involved and give as well.  Within two months of launching our support for BCC we exceeded our first year fundraising objective.

On May 29, 2014, we  marked our first ever TMG National Day in the Schools where 10 teams from PEI to Victoria helped serve nutritious breaks and hand deliver ‘Smile Bags’ to participating students in some schools.  As president of TMG I am so proud of the level of engagement and am so excited to see how this initiative will continue to grow over time.

One in seven of our kids in Canada go to school hungry every day. For $1 we can feed one child. It’s that simple.

The volunteers of the Breakfast Club of Canada welcomes close to 130,000 kids every day.  Canada is the envy of the world. We live up to that adoration in the way we treat our own at home. 

On a personal level I want to thank John Charbonneau for introducing us to this amazing organization, which has given us the opportunity to give back in some small way.



Sunday, May 25, 2014

Rent vs. buy revisited

As house prices increase and affordability for first time home buyers looks as if it’s diminishing, the question of whether to rent or buy inevitably comes up. It’s a good question, especially in the current economy, but with no clear answer. 

Just ten years ago, the answer was simple – buy!  It had been the answer for much of the past twenty-five years.  Mortgage payments were relatively low; in many cases less expensive than renting, and a house was a solid long-term investment. But those were different times – for the most part, jobs were relatively stable, incomes rose steadily, unemployment rates were manageable,  home prices were not crazy and the real estate market was balanced, with the exception of a few corrections here and there.

Today, in many parts of Canada, house prices continue to rise. For one, housing starts are decreasing across the country, yet demand is still there – the result is higher resale pricing. A few months ago, affordability may have been an issue; however, we are now sitting at sub-3% fixed mortgages and variable rate mortgages as low as 2.4%.

If you’re considering buying, take a look at your current situation.  If you’re single – living in a high-priced market like Toronto or Vancouver and have a job with an average salary, it might make more sense to rent.  The basic rule is when a house costs more than 200 times the monthly rent it generates, it makes more financial sense to rent rather than own. In Toronto or Vancouver, for example, the prices of houses are 300 times the rent they would generate. If you rent a condo in Toronto for $1000, you’d be paying $1700 a month to buy it – that doesn’t include condo fees and taxes.  Not all markets are pricey but not all markets offer employment opportunities, so there’s the big trade.

 Families with children usually prefer owning a home even though it might cost them more. The stability of ownership and providing a good home for the kids becomes the deciding factor. Having two income-earners can make mortgage payments and housing costs more manageable. If commuting is not an issue, house prices just outside a major centre offer value – bigger houses for lower prices.

Aside from financial concerns owning a home is certainly an emotional issue. Most millennials grew up in families where home ownership was the cornerstone of every investment portfolio. But the economic realities today are far different.

But life is change and we are seeing those changes in the housing market and in the economy. Inflation hit 2% last week.  This is the benchmark the Bank of Canada uses to make its interest rate decision. Clearly, rate cuts are not likely. But a fixed-rate mortgage under 3% is something to consider.

Talk to your mortgage broker to help you decide if homeownership is right for you right now. If not, then, put a plan in place to get that home when you’re ready. 

Friday, May 16, 2014

10 Ways to Improve Your Credit Score

So you got behind on that credit card payment. Or you were laid off for awhile and couldn’t keep up your car payments. Or that student loan is in arrears because it took you a while to get a job. Now your credit score is lower and you want to move on with your life – maybe buy a house or get a new car. Don’t underestimate the power of your credit score. It not only reveals to a lender if you’re a good credit risk, it’s also the basis for the interest rate you’ll pay. In today’s credit world, if your score is low you can still get a loan for a car or a home, but it will cost you. Lenders may charge extra fees and will certainly charge you a higher interest rate.  This is a costly proposition. However if you’re patient and persistent, you can improve your credit score in six to eight months. Here’s how:

  1. Pay bills on time: Pretty obvious, right? Late payments are the most common piece of negative information that appears on a credit report. Since payment history accounts for 35% of your total score, getting behind has a big impact. If nothing else, pay the minimum by the due date. By the way, any late payment will affect a credit score –cell phone bills, child support payments, etc.
  2. Keep balances low: If balances on your accounts equal more than 35% of the total credit available to you, it will actually hurt you. I know, it doesn’t seem right -- why have a credit limit of $1,000, let’s say, and only spend $350 of it? It’s all about proportion-- thirty per cent of your credit score is based on it.  A good credit risk is someone who doesn’t need credit. Go figure! TIP: For disciplined credit users: Call your credit card company and ask to increase the limit – this will decrease the proportion you’re using.
  3. Don't close unused accounts: The longer your credit history, the better. The length of time you’ve had credit is worth 15% of your total score. You get a star for each creditor you’ve had a positive history with –it’s proof that you’ve consistently paid on time. So don’t close older and unused accounts. Just put the cards away and forget about them.
  4. Only apply for credit when you need it:  It’s pretty common to walk into a store and get asked to apply for the store’s card to pay for your new purchase – the retailer will even offer you a special deal.  Think twice.  Opening new credit accounts or having your credit checked frequently will hurt your credit score temporarily. The reason? It looks like you’re going credit crazy. New credit determines 10% of your score. So try using an existing card for that purchase unless you know you won’t be applying for a mortgage or a car loan in the next few months.  
  5. Vary the credit used: Believe it or not, the types of credit you have accounts for 10% of your credit score. That means that having a car loan, a major credit card, a retail card and a mortgage can help your score.  But it’s not necessary to run out and apply for all that credit. (See item 4)
  6.  Correct mistakes in your credit report: Get a copy of your credit report from Equifax and Trans Union and make sure all the information is updated and correct. As you can imagine, these two agencies deal with millions of pieces of information on a monthly basis. Sometimes mistakes can happen, which can result in false credit scores, which can lead to you getting denied a loan or paying more in interest.  
  7. Separate accounts after divorce. Joint accounts are common in a marriage and once wed the info on each spouse’s credit report and their score will impact the other spouse.  If a couple divorces however, this creates a whole new set of challenges. A legal divorce does not absolve one or both from their financial obligations to their joint accounts. If both names are on the debt, it belongs to both spouses, married or divorced. 
  8. Avoid bankruptcy, if possible: This is bad news for your credit score, but it may be the only option. If you’re at this point, then your score has probably tanked anyway—some debts may have gone into collection. Bankruptcy is not a death sentence – there is life after one. It’s just going to take time to rebuild your credit. This will take a few years – there’s no quick fix – but it does give you a fresh start. Talk to a bankruptcy trustee. 
  9. Negotiate with creditors:  Your creditors are in the business of making a profit. If you’re not paying your bills, it impacts their bottom line.  Many of them can understand when financial challenges arise and you may be able to negotiate with them and come up with a solution that is mutually beneficial. Do this before you start missing payments.
  10. Be patient: No credit score calculation here. It takes time to repair a credit score and/or to build it up. Follow the steps outlined here and you’ll be on your way to a Triple AAA credit rating.