Things to Consider when House Shopping

It's a Personal Decision

While you may qualify for a certain mortgage amount, you should also consider how it will impact your lifestyle and other things that are important to you.

Will you be able to maintain your current lifestyle with the mortgage payments you're considering. Are there changes to your current spending that you can make to be able afford that new home?

Be Honest

Be honest in deciding what you can afford! Small minor changes to your lifestyle are likely doable - however major changes really need to be considered.

Look hard at your current lifestyle - how much do you spend on going out to dinner, movies, travel, etc. You may decide to eat at home more often, watch movies at home instead of going out; whatever your change, you need to assess how drastic is this change in your lifestyle. Will you be satisfied with the changes you've made? A dramatic change in your lifestyle would not be recommended or may not necessarily happen. You still need to lead your life!

Future Considerations Too!

It is also important to think ahead. Where will you be in a few years - kids, new job, etc. How this will affect your future cash flow? Future changes to consider:

The impact of family changes will affect cash flow and your ability to meet your monthly financial obligations. For example, the birth of a child can mean less income coming in due to maternity leave, increased expenses with new clothes, furniture for the baby's room, strollers, car seats, etc.

Look at your employment situation - will you be getting a salary increase soon? Is your spouse/partner going back to work? You may then want to look at stretching yourself now, for the added flexibility later - getting into that home you really want now.

Some additional thoughts - if you have never owned a home before think about the additional costs associated with owning a home that will impact your cash flow:

• Utilities - heat, hydro, internet, etc.
• New fencing, deck
• New furniture, window coverings
• Shovels, rakes, etc.

Think About Balance

So you will need to decide. Is the starter home right for you? Something that will allow you to be a home owner now, understanding that in a few years as your family grows and changes, you may need a larger home. Or do you want to stretch and get that dream home now - and potentially never have to move again.

You'll be living with this decision beyond today so you need to think about balance. Remember you want to be able to sleep at night knowing you can make your payments!

For more information, please visit the RBC Advice Centre

What everyone wants is to pay off their mortgage quickly. Here’s Leanne with tips on how you can pay off your mortgage faster!

Leanne - Branch Manager

Being mortgage free is a dream of many Canadians. Here at RBC we have many flexible payment options to help make that dream a reality.

For instance, if you come into a lump sum amount of money or you get a raise, or your finances change at all, we could help you change your mortgage payments in order to pay that mortgage off even faster.

One of the simplest options is to actually do a double up payment. One double up payment can actually save you tens of thousands of dollars of interest over the course of your mortgage. So that's one payment out of your entire year.

The double up option allows you to increase your monthly or bi-weekly payments. From your original amount you can add on $100 up to the exact amount of your bi-weekly or monthly payment. For example, if your bi-weekly payment is $1,000 you can increase that payment by an additional $100 to $1,000. Those additional funds going right to your principal reducing your overall amortization period.

Another option available is to put 10% down yearly as a lump sum payment directly to your principal. This lump sum is 10% of your initial value of your mortgage.

So for example, if you had a $200,000 mortgage, you have the ability to put a $20,000 lump sum directly to your principal every single year. Therefore you're putting that 10% right to your principal payment and reducing those overall mortgage costs.

Visiting our website you can see all the different options to help pay your mortgage off even faster.

For more information, please visit the RBC Advice Centre

Spring is finally here meaning time for renovations! Here are some tips on managing your renovation budget!

Renovating your home can be a great investment. Not only can a smart reno improve the overall value of your home, but at the end of it, you also get to live in a new and improved space that’s been custom made for you! But renovating can be expensive, and many people find that when they add up all the costs, they’ve spent more than they initially hoped or expected.

So how do you keep your costs under control? Well, there are a few ways to efficiently plan and budget for your renovation, and keep track of your costs along the way.

First, estimate how much your reno will cost you before starting out. To get a realistic gauge of your costs, go and price out some of the things you’re considering for your new space – like flooring options, appliances, and even accessories like faucets and door handles. And don’t forget to price out things like underpadding and scrap removal – many people miss budgeting for those less visible costs.

Once you’ve established a ballpark price tag, you can set up your budget. As your renovation gets under way, monitor your expenses and regularly compare them to what you’ve planned, to make sure you stay on track.

One suggestion is to set up your budget to include a reserve fund of at least 20% for unexpected costs. Even the most thorough budget can get derailed by hidden damages, plumbing issues or electrical surprises. A good tip is to keep this amount separate from the budget you share with your contractor. That way, it truly remains an emergency reserve.

And after all of this planning, renovations can still come in over budget. Sometimes it’s simply unavoidable. So it’s important to have a contingency plan – whether it’s savings you can draw from, or financing you set up with your bank. Whatever the case, be sure to have all of your funding in place before you start, so you have the money you need to finish the job.

Home renovations can be exciting, but also a little stressful. By properly planning out the financial side of your renovation, you’ll have one less thing to worry about. And, you can focus your efforts on say, choosing the right counter top… or maybe on trying to get your contractor to work just a little bit faster!

For more information, please visit the RBC Advice Centre!

How to balance your mortgage payments with your lifestyle

Roozbeh - Senior Account Manager

With the purchase of a new property there are a lot of things for you to consider. For example, property taxes, condo fees, maintenance of your lawn if you're in a house.

Those are the kind of things that if you're renting you're probably not paying out.

So it's very important for us to realize what those extra costs are and to find out what is the right balance between having your property and maintaining the lifestyle that you're comfortable with because your financial situation is very unique.

At Royal Bank we can help you find out what that right balance is and how we can help you enjoy your property over a long period of time.

It is important to realize that with what you're about to take on with the purchase of your new property, it is a long term plan and your budget and your lifestyle would change through time.

For example marriage, having a newborn or even a new job, and with a new child in your family, you may have a reduction in income because your spouse might be on a maternity leave, or extra expenses on things like daycare or diapers. We need to make sure that we plan for those kind of things.

With all this in mind you can find the right balance of having a mortgage payment that you're comfortable with. You could either pop in online and play around with some of the numbers that may give you an indication of how much you can afford or you can come into the branch, go through the calculator together, and at the same time have a look at doing the pre-approval for you to make sure that everything is set in place when you're looking to find that ideal property for yourself.

For more information, please visit the RBC Advice Centre

Here are some points to consider when deciding whether to rent or to buy a home.

Rohan - Account Manager

Purchasing a home is a big decision, and it is important to take the time to understand if you are ready to make the move from renting to buying your home. It is a personal decision and there are many factors to consider that are unique to you. Owning a home will most likely be the biggest investment in your lifetime.

The earlier you can re-direct your rent payments into a mortgage payment the faster you will start building equity in your home. Equity is the difference between the value of your home and the amount you owe on your home, and as you pay down your mortgage, or the housing market changes, your equity has the opportunity to grow.

But this doesn't mean that home ownership is the right fit for everyone. If your move is short term, or you are not sure yet of where you want to live it may be worthwhile to continue to rent. Owning a home is a long term commitment.

On our website we have a rent or buy tool that you may want to take a look at to understand what your current rent payment would equate to in a mortgage amount. For example:

If you are currently paying $1000 a month in rent, based on today's 5 year interest rate, amortizing the full amount of your mortgage over 25 years, and making a 10% down payment, this could equate to a house valued at close to $200,000.

It is important to keep in mind as a homeowner there are extra costs you need to account and budget for which may include: property taxes, property maintenance costs, utilities, and condo fees.

Weigh the pros and cons and determine when you are personally ready to make the move from renting to buying. If you are ready, or need help to determine if now is the right time for you, contact one of our RBC Mobile Mortgage Specialists to help you work through the numbers.

For more information, please visit the RBC Advice Centre.

Buying a home in Canada – terms to know

As you begin the process of buying your first home, you’ll probably come across a number of new terms and phrases. Here are some of the ones you’re most likely to encounter.

Amortization period. The length of time it takes to pay off the entire amount of your mortgage.

Down payment. The amount of your own money that you use to buy your home – it’s often expressed as a percentage of the purchase price.

Interest rate. The rate of return the lender (i.e. your bank) receives for letting you use the mortgage money for a specified term. The interest rate is usually expressed as an annual percentage rate.

Variable rate mortgage. Where the interest rate changes with your lender’s prime rate. Your payment stays fixed for the term, so if interest rates go up, your interest cost will too. But if interest rates go down, so will your interest cost.

Fixed rate mortgage. Where the interest rate is set for the length of the mortgage term. Fixed rates offer security so even if interest rates in general rise, your mortgage rate is locked in for the term.

Mortgage. A loan for the purposes of financing a home purchase where your home functions as security for repayment of the loan.

Mortgage default insurance. This insurance is mandatory for borrowers with a down payment of less than 20%. Mortgage insurance gets automatically added to your mortgage amount if required.

Prepayment charges. Money you need to pay your lender to compensate for the prepayment of a closed mortgage in part or in full before the end of your term.

Principal. The amount of the loan or mortgage you owe to your lender at any specified time, not including interest.

Term. The length of time during which your mortgage agreement is effective. The term can be closed or open.

Closed mortgage is a mortgage agreement that has restrictions on refinancing or prepaying the outstanding amount before the end of the term. Closed mortgages are a better choice if you don’t plan to move in the short term.

Open mortgages can be repaid either in part or in full at any time, without prepayment charges. Interest rates for open mortgages are generally higher than for closed mortgage because of the added prepayment flexibility.

For more information, please visit RBC Advice Centre

Conventional or High Ratio mortgage - which one is right for you?

Victor - Mobile Mortgage Specialist

When buying a home you have two options. You have a conventional, what we call a conventional mortgage, which is when you have 20% down or more. Or a low down payment mortgage with as little as 5% down you can buy your home.

When you have a low down payment mortgage, you are charged a premium on closing which we call a mortgage default insurance premium.

What we'll do is work with you to find out what the ideal down payment amount is for your financial situation and then work through those specific costs for you for closing.

That default insurance premium is also subject to a provincial sales tax and that is all calculated for you so that you have no surprises on closing when you purchase your home.

Buying a home and getting a mortgage is one of the biggest investment decisions you'll make. So making sure that you have had expert advice not only on the mortgage side and the financing side but on the investment side is very important. And at RBC we have all the relationship partners available for you to meet with to get the advice to make you feel comfortable with this purchase.

For more information please visit the RBC Advice Centre!

Understanding Mortgage Amortization

Dian - Account Manager

In its simplest term, amortization is the period of time that it takes you to pay off your mortgage in its entirety. Typically, your average amortization period is 25 years. However, it all depends on your personal goals and objectives.

Choosing a longer amortization period gives you the convenience of having lower monthly payments. However, the longer your amortization, the more you will pay in interest costs.

Alternatively, a shorter amortization gives you the convenience of paying off your mortgage a lot earlier. However, your payments are going to be larger but you will save in interest expenses.

Even if you have to start with a longer amortization period so that it fits into your budget, you have the opportunity of changing your amortization period throughout the lifetime of your mortgage. We recommend that you review your amortization at your renewal time so that you can assess your current financial situation. If your situation has changed such as your salary has increased or your expenses have lessened, then shortening your amortization period may fit into your goals.

Here at RBC we'll help you explore your options and find the best possible solution for you.

For more information please visit the RBC Advice Centre.

Closing costs can add up - Find out what you'll need to save for

Stephanie - Mobile Mortgage Specialist

Buying a home is one of the biggest investments you'll make in your life. And one of the things that you need to consider is the cost of closing the property. The closing costs are the list of costs that the lawyer presents to you at closing.

And it's really important that you know what they are because you don't want to be left with a surprise.

The main closing costs when you're closing a home include such things as land transfer tax, the legal fees and also there are taxes on the high ratio insurance premium that you may have to consider if you have put less than 20% down payment.

One of the main things that clients will not know up front are the adjustments. These are costs that the vendor has prepaid such as property taxes and the utilities.

When purchasing a newly constructed home from a builder, there are other costs to consider such as the new home warranty. And there are other costs built into the offer such as driveway paving or tree planting and these can vary from offer to offer and from builder to builder. It's very important to read the offer carefully so that you're not surprised when you're going to close the home and there are other costs that you haven't put into consideration

For more information, please visit the RBC Advice Centre.

Why get a mortgage preapproval?

Gina - Account Manager

If you're serious about purchasing a home, getting a pre-approval that actually puts your mind at ease because then you know exactly what you're working with. A lot of us, when you're looking to buy a house, have an idea of that ideal home, the white picket fence, the big backyard, the swimming pool potentially. But can we actually afford that home?

Getting pre-approved will set your benchmark or your price range, so you're not wasting your time and you're not getting disappointed down the road when you see the house of your dreams and find out after the fact that you can't afford it.

Sitting with an RBC mobile mortgage specialist will give you that peace of mind and the confidence when going in to purchasing a home, you'll know exactly what the process is and exactly what's expected of you so that you end up with the house of your dreams and the mortgage to finance it.

They can help you walk through the entire process from the down payment to all the other expenses that come up with home buying like land transfer tax, lawyer fees if there's real estate commission, to the mortgage payments, whether they're monthly, biweekly, the benefits of picking a certain payment schedule and then once you've signed that purchase agreement what the next step is.

Coming in to get a pre-approval is a no-cost, no-obligation process. What it does do is provide you with information and ease your mind so that you have confidence when you're looking to buy that home.

For more information, please visit the RBC Advice Centre

Find out how a better understanding of your mortgage amortization can benefit you!

Dian - Account Manager

In its simplest term, amortization is the period of time that it takes you to pay off your mortgage in its entirety. Typically, your average amortization period is 25 years. However, it all depends on your personal goals and objectives.

Choosing a longer amortization period gives you the convenience of having lower monthly payments. However, the longer your amortization, the more you will pay in interest costs.

Alternatively, a shorter amortization gives you the convenience of paying off your mortgage a lot earlier. However, your payments are going to be larger but you will save in interest expenses.

Even if you have to start with a longer amortization period so that it fits into your budget, you have the opportunity of changing your amortization period throughout the lifetime of your mortgage. We recommend that you review your amortization at your renewal time so that you can assess your current financial situation. If your situation has changed such as your salary has increased or your expenses have lessened, then shortening your amortization period may fit into your goals.

Here at RBC we'll help you explore your options and find the best possible solution for you.

 For more information, please visit the RBC Advice Centre!

Buying a home can be expensive as costs add up, find out what you’ll need to save up for.

Stephanie - Mobile Mortgage Specialist

Buying a home is one of the biggest investments you'll make in your life. And one of the things that you need to consider is the cost of closing the property. The closing costs are the list of costs that the lawyer presents to you at closing.

And it's really important that you know what they are because you don't want to be left with a surprise.

The main closing costs when you're closing a home include such things as land transfer tax, the legal fees and also there are taxes on the high ratio insurance premium that you may have to consider if you have put less than 20% down payment.

One of the main things that clients will not know up front are the adjustments. These are costs that the vendor has prepaid such as property taxes and the utilities.

When purchasing a newly constructed home from a builder, there are other costs to consider such as the new home warranty. And there are other costs built into the offer such as driveway paving or tree planting and these can vary from offer to offer and from builder to builder. It's very important to read the offer carefully so that you're not surprised when you're going to close the home and there are other costs that you haven't put into consideration.

For more information, please visit the RBC Advice Centre!

Life is expensive; here are some tips to achieving financial balance!

Kamran - Sr. Account Manager

The lifestyle you have today can have an impact on your tomorrow. What are your personal priorities? What makes you happy? Do you manage your money to allow you to go out for dinner once a week, buy a new car every few years, or take that Caribbean get away every year?

It is important to find a balance. Think about where you want to be 2, 3 maybe 5 years from now? Will you have the financial means to get there?

Consider your purchasing and borrowing ability - manage your credit today so you have the financing available to help meet your dreams of tomorrow, for example being able to get a mortgage to buy a home.

Take some time to identify what your goals are and rank them as to what is most important to you. This can help you get a clear financial picture of what you need to focus on. Take one goal at a time, establish a timeline and the dollar value required to meet that goal.

It is important to manage credit responsibly now. It is the key to your future ability to access funds. If your borrowing has gotten out of hand, come in and see us at any of our branches and we will help establish a plan to manage debt now and plan for the future.

For more information visit the RBC Advice Centre.

Protect your Biggest Investment

Kelly - Mobile Mortgage Specialist

HomeProtector insurance provides life and disability insurance to protect your large investment. Life insurance can provide protection upon death up to a maximum of $500,000.

And disability insurance can provide you protection. In the event that you become ill or injured and can't work for a period of time, RBC Royal Bank will cover your mortgage payments for up to $3,000 per month up to a two-year maximum.

Even if you receive disability insurance through your employer, typically it is a percentage of your income, so it may not be enough. HomeProtector insurance will help cover your mortgage payments on a monthly basis so the income you receive from your employer can help go towards your other living expenses.

If you'd like some further information on HomeProtector insurance, contact me or visit us online at our RBC mortgage centre.

For more information, visit the RBC Advice Centre

How you can best save for your child's education with an RESP

Thanks to Trish- Investment Specialist at RBC.

Kids are expensive, aren't they? Between groceries, clothing, phone bills, ... never mind trying to save for their education! But of course it is important - we all want the best for our kids.

We want to set them up to succeed in life, which usually includes making sure they can go to college or university. So how do you save for this event, given all the other financial demands in your life?

The answer is actually simple: start a Registered Education Savings Plan, or an RESP, for short. An RESP is a government approved investment plan that helps you save money for your child's post-secondary education.

It's a great way to save, because your money grows on a tax-deferred basis. This means income is not taxed until you take it out for your child's education. And as a student, they probably won't have much in the way of taxable income, so they will likely have little or no tax to pay when that time comes.

And you know what? You get some savings help along the way from the government. That's right - eligible RESP contributions automatically receive a grant from the Government of Canada until the year your child turns 17. So on top of what you've contributed, you can get an extra $500 or more per year... or up to $7,200 over the life of the plan.

That's 7,200 reasons right there to set up an RESP. And you don't need a lot to start - as little as $25 per month in fact. You can make things really easy by setting up automatic contributions so you'll hardly notice the money coming out. And if you need to, you can change your contributions just by giving us a call.

And grandparents, relatives or friends can also easily contribute to your child's education. So instead of buying the latest toy, they can give the gift of education. The best part? No assembly required.

Please visit the RBC Advice Centre for more information.

Buying a home? Here are some things to consider that may save you money.

Buying a new home is very exciting event and likely one of your biggest financial investments.

Before you buy your home, consider if the home needs repairs, or is a higher insurance risk. You may be able to negotiate a lower purchase price, based on anticipated expenses.

For example, some things to consider are...

• Older homes with aluminum, or knob and tube wiring could be considered a fire risk and can increase your insurance rates.
• A home with oil heating can be an environmental liability risk.
• Both of these things can be updated to reduce your insurance costs, but they may be expensive and should be factored into your final costs.
• Another consideration is whether the home you want to purchase has a history of water damage. Certain areas are known for flooding and sewer back-ups which could increase your insurance rates, so you may want to adjust the purchase price accordingly.
• Before you make your final decision, be aware and ask questions, what you learn could help you save money and ensure you pay the right price for your home.

For more information, visit the RBC Advice Centre.

Shop securely online with your credit card

Shopping online is an appealing concept to most of us. It removes obstacles such as store hours, product availability, parking, crowds, bad weather, and most importantly lack of time. Yet many of us will still reach for the car keys in favour of turning on the computer, for fear of online credit card fraud.

The fact is, when purchasing online, using your credit card is the safest way to go.

How is online shopping safe for me?

Because most credit cards have additional built-in armour to help protect you from fraudulent use, using your credit card for online shopping is extremely secure.

All personal credit cards in Canada offer additional layers of security for your protection. For example, Zero Cardholder Liability is the credit card company's promise that you will not be responsible for charges to your card, as a result of fraudulent or unauthorized use, provided you take reasonable precautions to protect your PIN and your card, as set out in your RBC Royal Bank Credit Card Agreement.

Additionally, the credit card companies have features designed specifically to protect you when shopping online. By registering a password for your Visa or MasterCard and shopping at Verified by Visa or MasterCard SecureCode enabled merchants, only you can use your card for online purchases. It's easy, secure, and it's free.

But familiarizing yourself with your credit card features and taking a few additional precautions can also help to ensure a safe and pleasant online buying experience.

Here are some useful tips to keep in mind when using your credit card online:

Be sure to shop only with merchants you know

Ensure you are purchasing within a secure browser, allowing a secure transmission. This can usually be identified by a padlock symbol or by an "https" url.

Check the delivery, refund and returns policy in the event you are not satisfied with your purchase.

Take the time to read the merchant's privacy policy. The information you are submitting should be kept private and not shared with any 3rd parties.

Keep your user names and passwords unique and secret.

Only give your card details after you initiate the purchase.

Only send information or reply to emails from merchants you know.

Check with your credit card provider... your card may also provide you with Purchase Security and Extended Warranty Insurance, which protects your purchases from loss, theft or damage and extends the manufacturer's warranty.

Shop in comfort

So pull up a chair, turn on your computer, and do your shopping from the comfort of your own home... and with the comfort of knowing that there are many safeguards in place to make sure your online shopping experience is secure and easy.

For more information visit the RBC Advice Centre.