Written by: Buffini & Co There comes a time for many of us to either downsize or upsize. And it's always good to know your options.

• 37% of Canadians would like to downsize.
• 25% of Canadians would like to upsize.

Home too big? Has your home and yard become a lot to maintain. Do you have a big home repair on the horizon? Would you rather spend your time and money instead on things like visiting family and friends, taking that dream trip or pursuing a new hobby? Looking to downsize?  

• ADUs (accessory dwelling units)
• Condo or townhouse
• Age 55+ developments
• Shared living options

Or not big enough? Has your family outgrown your current space? Maybe you need room for a home office or gym. Or the kids need a room of their own. Looking to upsize?  

• Larger condo or townhouse
• New home construction
• Existing homes for sale
• Home addition

Ready to Take the Next Step?  

• Take to people already living in the community you are considering. It will help you get a true sense of the culture and vibe there.
• Research online sources for more information and reviews. Check out official town/city websites as well as various social media pages.
• Create a list of your "need to haves," "nice to have" and "dealbreakers." This will help you compare communities to see which ones will most likey be the best fit.

Written by: Dr. Sherry Copper Bank of Canada Cuts Rates Another Quarter Point Bank of Canada cut the overnight policy rate by another 25 basis points to 4.25%. This is the third consecutive decrease since June. The Bank’s decision reflects two main developments. First, headline and core inflation have continued to ease as expected. Second, as inflation gets closer to the target, the central bank wants to see economic growth pick up to absorb the slack in the economy so inflation returns sustainably to the 2% target. Overall, the economy’s weakness continues to pull inflation down. However, price pressures in shelter and some other services are holding inflation up. Since the July Monetary Policy Report, the upward forces from prices for shelter and some other services have eased slightly. At the same time, the downward pressure from excess supply in the economy remains. Tiff Macklem said today, “If inflation continues to ease broadly in line with the central bank’s July forecast, it is reasonable to expect further cuts in the policy rate. We will continue to assess the opposing forces on inflation and take our monetary policy decisions one at a time.” The economy grew by 2.1% in the second quarter, led by government spending and business investment. This was slightly stronger than forecast in July. Together with the first quarter’s growth of 1.8%, the economy grew by about 2% over the first half of 2024. That’s a healthy rebound from our near-zero growth in the second half of 2023. The Bank’s July projection has growth strengthening further in the second half of this year. Recent indicators suggest there is some downside risk to this pickup. In particular, preliminary indicators suggest that economic activity was soft through June and July, and employment growth has stalled in recent months. That makes this Friday’s Labour Force Survey data for August particularly important. We expect economic activity to slow in the third quarter to rough 1.3%, keeping the Bank in an easing posture through next year. The unemployment rate has risen over the last year to 6.4% in June and July. The rise is concentrated in youth and newcomers to Canada, who find it more challenging to get a job. Business layoffs remain moderate, but hiring has been weak. The slack in the labour market is expected to slow wage growth, which remains elevated relative to productivity. Turning to price pressures, CPI inflation eased further to 2.5% in July, and the central bank’s preferred measures of core inflation also moved lower. With the share of CPI components growing above 3% around its historical norm, there is little evidence of broad-based price pressures. But shelter price inflation is still too high. Despite some early signs of easing, it remains the most significant contributor to overall inflation. Inflation remains elevated in some other services but has declined sharply in manufacturing and goods prices. As outlined in the Bank of Canada’s Monetary Policy Report, inflation is expected to ease further in the months ahead. It may bump up later in the year as base-year effects unwind, and there is a risk that the upward forces on inflation could be more potent than expected. At the same time, with inflation getting closer to the target, the central bank must increasingly guard against the risk that the economy is too weak and inflation falls too much. Judging from comments made at today’s press conference, the BoC is at least as concerned about too much disinflation–taking the economy into a deflationary spiral. Macklem said, “We are determined to bring inflation down to the 2% target and keep it there. We care as much about inflation being below the target as we do about it being above it. The economy functions well when inflation is around 2%.” With continued easing in broad inflationary pressures, the Governing Council reduced the policy interest rate by 25 basis points. Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up. The Governing Council is carefully assessing these opposing forces on inflation. “Monetary policy decisions will be guided by incoming information and our assessment of their implications for the inflation outlook. The Bank remains resolute in its commitment to restoring price stability for Canadians”. Bottom Line Monetary policy remains restrictive, as the chart above shows. While the target overnight rate is now 4.25%, core inflation is only roughly 2.4%. Real interest rates remain too high for the economy to reach its potential growth pace of about 2.5%. Weaker growth implies a continued rise in unemployment and excess supply in other sectors. In separate news, the US released data showing that US job openings fell to their lowest level since January 2021, consistent with other signs of slowing demand for workers. US job growth has been slowing, unemployment is rising, and job seekers are having greater difficulty finding work, fueling fears about a potential recession. Federal Reserve policymakers have made it clear they don’t want to see further cooling in the labour market and are widely expected to start lowering interest rates at their next meeting in two weeks. In other news, consistent with a global economic slowdown, oil prices have plunged to new 2024 lows. Weak oil prices are a harbinger of lower inflation, growth and mortgage rates. Bonds rallied in the wake of the disappointing US data, taking the 5-year government of Canada bond yield down to a mere 2.89%, well below the 3.4% level posted when the Bank of Canada began cutting interest rates in June. This decline in market-driven interest rates reduces fixed-rate mortgage yields. Moreover, today’s cut in the overnight rate will be followed soon by a 25 basis point reduction in the prime rate to 6.45%, reducing floating rate mortgage yields as well. The Bank of Canada has two more decision dates this year: October 23 and December 11. At those meetings, the Bank is widely expected to continue its quarter-point rate cuts, taking the overnight rate down to 4.0% at yearend and 2.75% next year.

Written by: Zak Khan of REW If you’re a freelancer, gig worker, small business owner or independent contractor looking to buy a home, you might have already realized that the process will be a little different for you compared to wage employees. But fear not, you can still secure a mortgage and land the home of your dreams with some careful planning. We spoke to a panel of experts at Vita Lending in BC to understand how you can snag the best chance of success.  

Mortgages for business owners.

If you’re a thriving small business and making a sizable income, why does it seem so difficult for lenders to hand over home mortgages to business owners? “Essentially the difference for self-employed and business owners is that they do have legitimate expenses they can deduct. When that happens, your taxable income might look lower than your actual income,” explains Jeffrey Tseng, Managing Partner at Vita Lending. By lowering your taxable income by maximizing business expenses and personal deductions, you may be limiting your mortgage potential. There can be a discrepancy between what's on your tax return and how much money you actually earn.  

What do you need when applying for a mortgage when self-employed?

As early in the home buying process as possible, consult an experienced mortgage broker or specialist. Knowing what you will need upfront will decrease frustration and disappointment down the road. “The most important thing besides documentation, [is] to meet an experienced mortgage consultant,” says Shin Ha, Managing Partner at Vita Lending. You’ll have to save for a down payment, too. In Canada, down payments are broken down like this:

• A down payment must be at least 5% if the purchase price is $500,000 or less.
• If the purchase price is between $500,000 and $999,999, the down payment is at least 5% of the first $500,000 and 10% for the remaining portion.
• If the purchase price is $1 million or more, the down payment is at least 20%.

If you can offer more than the minimum down payment, that will increase your likelihood of securing a mortgage. Remember, it’s crucial not to overextend yourself. You want to have adequate income to qualify for a mortgage and to ensure you have money to reinvest in your business. You may want to consider completing a statement of income. Basically, instead of relying on tax records or other documents to show your income, you make a statement declaring how much you make. If you’re taking the stated income route, stay reasonable in your declaration of income. Your lender will look at an average income for someone of similar experience and occupation. That may mean they’ll miss certain streams of income, though. By working with a broker, they can help you better navigate and explain your income situation to a lender. “Most importantly we would need to understand how the client conducts their business. For example, I work with electricians or plumbers who receive cash or e-transfers,” says Alan Wu, Managing Partner at Vita Lending.  

Be honest and transparent.

No matter how you conduct your business, explain everything to your mortgage broker. “Believe in [our] abilities. We are working for [you], not banks. Consider us like your family doctor; tell us everything,” Shin explains. Remember, your broker is there to help you. As Alan notes, “It doesn’t matter how you make your money, as long as it is legitimate. Just be transparent how you make your money.” As a business owner or self-employed individual, some lenders may be able to “gross up” your income, which is where you show how your gross income before taxes is actually higher than what appears in the final taxable amount. Usually, this is because you may have deducted a lot of legitimate expenses, some of which may be discretionary. If you choose to “gross up” your income, you’ll have to show how. Again, work with your broker to determine the best method to go about doing this. Depending on your credit and the way your business is registered (self-employed or incorporated), some lenders may add 15% to 20% to your total income as a way of adding back some expenses for self-employed applicants. In contrast, if you’re incorporated and have verifiable income, some financial institutions can gross-up your income by as much as 15%. But if you’re issuing a T4 to yourself as an employee of your company, the lender will use whatever salary you report. As for mortgage insurance, you’ll need it when putting less than 20% down. Which means, for insured mortgages, the maximum purchase price of the property must be less than $1 million. Going the stated income route means you lose access to traditional insurance offered to salaried employees, but most lenders have alternative options for self-employed and small business owners.  

Be proactive.

The bottom line is that the best rates are generally offered for those who demonstrate good credit repayment history, are income-qualified and are accurately reporting their income. To ensure the best possible success, make sure you have all of your information as organized as possible when meeting with your mortgage professional. “Because there’s so much involved with dealing with a business or entrepreneur given the additional amount of information needed, do allow ample time for an application to be put through,” says Jeffrey. Here are some things to bring with you when meeting a mortgage broker:  

• Accountant-prepared business financial statements for the last two years (particularly crucial if you’re incorporated).
• Business license documentation.
• Accountant-prepared personal T1 general tax returns.
• Most recent and preferably the previous three years' Notice of Assessment and proof that taxes are up-to-date. Owing taxes can do more damage than anything else. If you owe, pay off immediately.
• Corporate bank statements illustrating current cash flow.
• Bank statements showing regular income for the past six months or longer.
• Be ready to discuss your business. Things like income, business expenses and specific milestones will be among the topics addressed. Remember, be honest about how you make money.

These tips are not exhaustive of everything your lender might ask you. Take your time to prepare your materials, save for your down payment and consult a mortgage broker as early in the process as possible. They'll be able to give you a prediction on how confident they are in your ability to get a mortgage.