Financing Connections

To launch a new product or company, merge two entities, or go public...financing is often the first step. Our Professional Partners include specialists in many disciplines...often averting significant legal expense. Good planning is the key, so ask us in 'early in the game'.

Ask how we've helped over forty clients get the money first, then GO BIG.

Private Placements - often a case of financial 'match-making', utilizing talent and sources of funds with varying degrees of 'hands-on', equity participation and/or debt.

IPO advice, team-building and exit strategies. 

See the latest new lending trend! Go to the P2P section below!

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NEW! The Haft Group...the most experienced financiers...check out their website: www.haftgroupinc.com

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Richmond Media: low risk financing...fast!

Dial us up! 604 987 6657

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Capital Transfer Agency... Ask about our scrutineer service, stock transfer maintenance and shareholder record updating...

Call for more info! 604 987 6657

...from $1,500 up per year.

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Also:

Government subsidies, grants, loans, Scientific Research & Educational Development (SRED) tax credits, flow-through Share offerings...

Phone 604 987 6657

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Welcome to the September issue of Randy Johnson's monthly newsletter!

This month’s edition focuses on the importance of looking beyond rates when selecting a mortgage that best suits your needs, as well as offers top tips for saving money while back-to-school shopping. Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

It’s easy to get caught up in the idea that comparing mortgage rates will guarantee you get the best bang for your mortgage buck. While this may be true for particular situations, there are many scenarios where this strategy is not effective. Following are three reasons why it doesn’t always pay to make a decision based solely on rates.

Reason #1
Your long-term plan and risk tolerance should determine which mortgage product is right for you. This product may or may not have the lowest rate.

For instance, there are cases where lenders will offer lower rates for insured mortgages. With insured mortgages, however, you’re charged an insurance premium, which is usually added to the mortgage amount. But if you’re not planning on keeping the property for a long enough time to offset that cost, it may be better to take an uninsured mortgage with a slightly higher rate. The cost difference you will pay with the higher interest rate may still be less than what you may pay in insurance premiums.

As another example, if you prefer to budget for a consistent payment and can’t handle rate fluctuations, it may be better to go with a higher fixed-rate mortgage. If you think current rates are low enough and you will be living in your property for at least five years, it may be wise to also opt for a mortgage with a longer term.

Reason #2
One of the biggest mistakes people make when merely comparing mortgage rates is failing to
consider important factors such as prepayment options to help pay off the mortgage faster, whether secondary financing options are allowed, early payout penalties, or what fees are involved.

It’s not enough to simply compare mortgage rates because you have to know what “clauses” are contained within the mortgage deal. There may be cases where you will find a lender with the lowest rate and willing to pay for your closing costs, or even provide you with cash-backs after closing. I will always look at the clauses and inform you on what’s truly involved in signing up for your mortgage.

Reason #3
Lenders can change their rates at any time. As such, if you’re shopping for rates with one lender and then approach another that gives you a lower rate, it’s quite possible that the first lender has also dropped its rates. This is why it’s important to get pre-approved with a lender once I’ve helped find you a mortgage that fits your needs. In some cases, we can secure your rate and conditions for up to 120 days.

These are just three reasons why it’s not enough to merely compare mortgage rates. The mortgage rate you may qualify for is also highly dependent on your credit score among other things. In order to get the best mortgage deals, you need to have solid credit.

As always, if you have any questions or concerns about finding the best mortgage product for your unique needs or your credit score, I’m here to help!

It’s that time of year again – back-to-school time is almost upon us, although it seems like the summer just began. The back-to-school shopping season is a lucrative one for retailers, but it can be a cash-strapped one for parents and grandparents. Following are some tips to help you save money during the back-to-school shopping season.

Make a List
Evaluate your child’s wardrobe and determine what still fits and what needs to be replaced. Figure out how many pairs of pants, shirts, socks, underwear and shoes your child needs to comfortably make it through a week. Check the school supply list from the teacher and weed through last year’s leftover school supplies for anything that can be salvaged. Heavy duty items such as clipboards and backpacks can usually be used for more than one year, while items like pencil crayons usually need to be replaced each year. Make a master list of all the items you will need to purchase before the start of the school year.

Build a Budget
If you figure out the maximum amount you will need to spend per child – and stick to your budget – you will not be surprised by the amount of money you have to shell out to get your kids ready for the school year. Based on the master list you created above, realistically budget for all required items.

Check Sales Fliers
Department store back-to-school sales fliers are a great resource to help with your checklist and budget . And each store often offers a few items at extremely low prices. These loss leaders are designed to draw customers into the store in the hopes that they’ll complete all of their back-to-school shopping in one stop. Savvy shoppers can take advantage of the sales at each store and get the best possible prices on a variety of items.

Start Early
Waiting until the last minute to complete your back-to-school shopping may result in a few great sale purchases but, overall, more money will be spent trying to get all the items at once. Prices on popular back-to-school supplies will often go up at the last minute, making those sales prices a wash. Starting early ensures that you’ll be able to find all of the items your children need while, at the same time, getting the best prices.

Wait an Extra Month or Two
If you miss out on early back-to-school shopping, waiting until after the school year has begun is also a smart decision. School supplies generally need to be brought to school on the first day, but all the clothing does not need to be purchased ahead of time. Ensuring that your child has one special, new outfit for the first day of school is often enough. Wait until the next month to make additional purchases to ease the initial financial burden. Most children start school at the end of the summer when the weather is still warm enough for summer clothes. Since long pants and long-sleeved shirts will often not be practical right away, these purchases can be delayed.

The back-to-school shopping season does not have to deplete a parent’s or grandparent’s bank account. Reusing existing items, smart shopping and timely shopping can ease the burden and make the back-to-school time a financial breeze if you plan ahead.


We are Canada’s premier online mortgage company, and one of the fastest growing mortgage brokerages nationwide!
We have more than 1,500 Mortgage Professionals from more than 200 locations across the country!
Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
We work for you, not the lenders, so your best interests will always be our number one priority.
We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
We close loans in all 10 provinces and 3 territories.
We can process your mortgage in as few as 7 days.
We are the preferred mortgage lender for several of Canada’s top companies.
Dominion Lending Centres’ Mortgage Professionals are available anytime, anywhere, evenings and weekends – and we’ll even come to you!

Call Randy Johnson 

604-729-7063

rjohnson@dominionlending.ca

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The Top 5 Mortgage Mistakes                     August 2009

Obtaining financing on a new or existing home can be a stress-free, straight-forward process if you’re prepared. But if you’re not prepared, there are many common mistakes you can make. Most of these mistakes are easily avoidable with some preparation and informed advice – feel free to call Randy with any questions/concerns.

Below are the Top 5 Mortgage Mistakes people make when trying to secure financing for their home:

* Automatically renewing their current mortgage with their existing lender
* Signing documents without reading them
* Taking it to the limit – running up credit
* Not planning for your mortgage application
* Failing to choose the best product for your situation

There are many different types of loans out there. There are fixed- and variable-rate products, hybrid and no-frills mortgages, lines of credit, 1-10-year terms, up to 35-year amortizations, and more. And although choice is great, it can be quite overwhelming without expert advice. While one person would benefit from a variable-rate product, their neighbour may be better suited to a fixed-rate product. The key is to always explain your current situation and future goals in detail to me so I can select a product that best meets those needs.

Automatically renewing with your existing lender
Although you may feel an allegiance with the current financial institution that holds your loan, they may not be able to offer you the best products. When refinancing or renewing, I will always shop the market for your best available option, much like I do when securing your first mortgage. This ensures you end up with the best mortgage rate and terms customized to your unique situation.
In many cases your bank will offer you the posted rate in hopes of you signing the commitment without shopping around. Make sure you do your due diligence when refinancing and renewing. After all, this is your home, your mortgage and your money!

Signing documents without reading them
Never sign documents without reading them. If you are unsure about your understanding, always ask me for clarification. Remember that you are the one entering into the agreement, so you need to understand and agree with what you are committing to.

Taking your credit to the limit
Make sure that your credit balances are in your favour when it comes to your mortgage application. Lenders are looking for an appropriate debt-to-income ratio. In other words, you need to have more income than you have debt. Avoid running up a balance on your credit cards and pay down existing debts as much as possible.

Failing to plan ahead
If you know that you will need to obtain, renew or refinance a mortgage, it’s essential to plan for it by ensuring your credit is in order. If it’s not, start preparing. Do not make any purchases on your credit cards that you cannot pay off and if you carry a balance on your credit cards, start paying them down. Refrain from making any large purchases before securing your mortgage. If you’re planning to buy a car, wait until after you have secured financing, as your debt-to-income ratio will rise and you don’t want this while trying to secure a mortgage.

Failing to choose the best product for your situation

Understanding how the mortgage process works and how lenders qualify your loan will help you avoid the above mistakes. As always, if you have any questions or concerns, I’m here to help!

Call Randy Johnson 

604-729-7063

rjohnson@dominionlending.ca

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Have you considered 50/50 mortgages                     July 2009

Hybrid mortgages – also known as 50/50 mortgage products – include an equal mix of fixed-rate and variable-rate components within your single mortgage. This means you get the best of both worlds – the security of fixed repayments with the flexibility of a variable rate.

Although there was a time in recent years when mortgage experts considered a variable rate mortgage as the obvious choice to save mortgage consumers money over the long term, with fixed rates remaining near historic lows, a 50/50 mortgage may be a great alternative for you.

In essence, since it’s extremely difficult to accurately predict rates over the long term, a 50/50 mortgage offers interest rate diversification, which can help reduce your level of risk.

If you opt for the Dominion Lending Centres 50/50 Balanced Mortgage, half of your mortgage is locked into a five-year fixed rate and half is at a five-year variable rate. You can lock in your variable-rate portion at any time without paying a penalty. As well, each portion of the 50/50 mortgage operates independently – like two separate mortgages – yet the product is registered as only one collateral charge.

The 50/50 mortgage product is well-suited to a variety of borrowers, including those who:

Would normally go fully variable but are afraid prime rate is at its bottom
Aren’t comfortable being locked into a fully fixed rate
Can’t decide between a fixed or variable mortgage
Some features of the 50/50 mortgage include:

20% annual lump-sum pre-payment privileges
20% annual payment increase ability
Portability (the option to transfer your existing loan amount to a new property without penalty)
As the 50/50 option is a fairly new offering, according to a recent study by the Canadian Association of Accredited Mortgage Professionals (CAAMP), 5% of Canadian mortgage holders have 50/50 mortgages compared to 28% with variable-rate mortgages and 68% with fixed-rate mortgages. But many experts believe the 50/50 mortgage is quickly gaining momentum.

If you have any questions about the 50/50 mortgage product and whether it’s right for you, feel free to give me a call so we can discuss your options.

Call Randy Johnson 

604-729-7063

rjohnson@dominionlending.ca

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NEW! Mortgage Advice & Planning                     May 2009

What you do between the time your mortgage is approved and when it funds...

In light of the current market and tightening of credit underwriting standards by both lenders and mortgage default insurers as of late, keep in mind that now – more than ever – it’s important to be careful what you do between the time your mortgage is approved and when it funds. A few mortgage lenders and insurers have been doing something lately that they have not done in a long time, and that is pull new credit bureaus prior to funding, especially if there is a long period between the time of your approval and when the mortgage actually funds.

Following are eight tips to keep in mind between your mortgage approval and funding dates:

Don’t buy a new car or trade-up to a more expensive lease.
Don’t quit your job or change jobs. Even if it’s a better-paying job, you still are likely to be on a probationary period. If in doubt, give me a call and I can let you know if this may jeopardize your approval.
Don’t change industries, decide to become self-employed or accept a contract position even if it is within the same industry. Delay the start of your new job, self-employment or contract status until after the funding date of your mortgage.
Don’t transfer large sums of money around between bank accounts. Lenders get especially skittish about this one because it looks like you’re borrowing money. Be ready to document cash transactions or money movements.
Don’t forget to pay your bills, even ones that you are disputing. This can be a real deal-breaker. If the lender pulls your credit bureau prior to closing and sees a collection or a delinquent account, the best you can hope for is that they make you pay off the account before they will fund. You don’t want to have to scramble to pay off a debt at the last minute!
Don’t open new credit cards. Again, just wait until after your funding date.
Don’t accept a cash gift without properly documenting with me – even if this is from proceeds of a wedding. If you have a bunch of cash to deposit before your funding date, give me a call before you deposit it.
Don’t buy furniture on the “Do not pay for XX years plan” until after funding. Even though you don’t have to pay now, it will still be reported on your credit bureau, and will become an issue – especially if your approval was tight to begin with.
While you may not risk losing your mortgage approval because you have broken one of these rules, it’s always best to talk to me before doing any of the above just to make sure!

Call Randy Johnson 

604-729-7063

rjohnson@dominionlending.ca

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NEW! Mortgage Advice & Planning                     March 2009

Why Now is an Ideal Time to Purchase Revenue Property.

If you’ve been thinking about buying a revenue property, given the current lending environment and the slower real estate market – which has shifted to a buyers’ market – there are several reasons why now may be an ideal time.

Interest rates have also been dropping to historic lows as of late, which should help you more easily obtain financing for your revenue property.

And although the real estate market slowdown has seen prices drop and interest rates dip, rental income has not wavered – making now an optimal time to start building your revenue property portfolio or continue adding to your existing list of properties.

During a buyers’ market in the real estate cycle, sellers are far more flexible and willing to work with you because they are most likely not receiving much traffic through their doors, let alone being bogged down with multiple offers. And in cases where property has been on the market for quite some time, negotiating a sales price should offer you even more added flexibility.

And when it comes to choosing a revenue property that meets your needs, now is also a great time because the inventory of available properties is plentiful. You will have multiple properties to look at and not be rushed into making a hasty decision with a long list of other buyers ready to make a purchase.

Another bonus is that, should you wish to make changes to your revenue property, tradesmen who do renovations aren’t as busy as they used to be. As a result, these tradesmen are now answering their phones on the first ring, showing up when they say they will and offering much more competitive pricing.

In order to take advantage of this opportunity, the key is to work with me – a mortgage professional who is an expert in this niche and can provide you with a wealth of knowledge and ongoing information that will help you make informed investment decisions and feel at ease throughout each purchase.

I offer an invaluable service to real estate investors because, if the mortgages on your investment properties are not set up properly from the on-set of each venture, you will not be able to get future financing – a necessity for continuing to build your portfolio of revenue properties.

Because I’m an expert in dealing with real estate investors, I know that a portfolio approach must be taken to ensure future financing for those looking to purchase revenue properties. I will ask you in detail about your specific property investment goals and develop a game plan for the next five or 10 years based on these goals.

I can work with you in order to determine where you currently stand in terms of your real estate goals, where you need to be to meet those goals and the steps involved to get you there.

Keep in mind, however, we should go over your plan at least annually to ensure you’re still on track.

A team of experts
Because I specialize in helping clients acquire revenue property, I also partner with other investment property experts, including real estate agents, lawyers, accountants, insurance agents and contractors, to name a few, which enables me to provide valuable information to you through this knowledge network I have created.

By forming ties with other trusted experts, I am able to provide you with a one-stop shop for meeting all of your real estate investment needs.

I can also help direct you to other organizations that will offer you further insight into your real estate investment needs. If you join groups such as the Real Estate Investment Network (REIN) or even a local Rental Owners and Managers Society (ROMS), for instance, you can receive a wealth of added knowledge catered to your revenue property needs.

While REIN can provide market insight and investing tips through years of experience, ROMS helps with credit checks for potential tenants, keeps you abreast of changes to the Residential Tenancy Act and other topics/concerns often faced by landlords.

As always, if you want to talk about revenue property purchases, I’m here to help.

Helpful Everyday Savings Tips

There are several practices you can partake in on a daily basis to help conserve some of your hard-earned cash. You may find the following list will help you have more money left over at the end of each month to put towards anything from home renovations to your children’s education to investing:

Find a credit card with a lower interest rate. There’s no sense collecting air miles or other such points if you find you’re having difficulty paying off your monthly bills. Credit cards are, after all, only useful if you avoid paying interest on unpaid monthly balances. And there’s not much point in paying 20% interest when you don’t have to. If you start shopping around among several credit card providers and discover a better rate than your current provider is offering, ask your credit card provider to lower your rate since you’ve found a better deal elsewhere. They may be willing to negotiate when they risk losing your business.
Throw away your bank card and leave your credit card at home. ATM charges can add up and it’s hard to live on a budget if you keep paying for things on credit. Or, try only using your bank card once between pay cheques. That will help you budget your money accordingly.
Do your food shopping at discount stores. Discount stores may be more crowded and offer less selection than your local higher-end grocery chain, and you’ll have to pay a quarter for the cart and bag your own groceries, but you’ll see a payoff at the cash register. If you’re shopping for a larger family, try buying in bulk.
Start packing your own lunch. Not only is restaurant food expensive, but how many times have you ordered ‘just anything’ off the menu because you were really hungry? By packing your own lunch, you’ll not only save money, but you’re also likely to save in the calorie department as well.
Bring a coffee maker or kettle to work. With coffee ranging anywhere from $1 to $5 a cup (depending on cup size, exoticness of brew and the franchise from which it is purchased), some people are dropping anywhere from $20 to $200 a month just to stay caffeinated. Don’t believe it? Try this: bring your own coffee to work, make it yourself and put the money you would have spent in a jar on your desk. At the end of the month, empty the jar and see how much you’ve saved.
Cancel your gym membership. Go for a walk or run around your neighbourhood or office instead. After all, spring is almost upon us. If it’s muscle you’re trying to amass, then start doing push ups in your bedroom, invest in a chin-up bar and start walking up and down multiple flights of stairs. You don’t need to spend $50-$150 a month to stay active.
Got kids? Forget shopping at Baby Gap. Buy children’s clothing at discount retailers or department stores. Better yet, call everyone you know with young kids, bring them all together and swap anything from shoes to strollers to clothes and toys.
Find free or low-cost activities for your kids. School board parenting centres and city recreation programs are good places to start.
If you’re getting $100 a month from the government for child care, try your best to keep banking it in a high-interest savings account for your child’s future. Saving can be hard, especially in these times, but a few dollars a month can go a long way over the course of 20 years.
Itemize your monthly expenses and allocate money for each by placing it in marked envelopes. If you only want to spend $50 this month on entertainment, then put $50 in an envelope marked “Entertainment” and use it to entertain yourself. Once the money’s spent, that’s it.
Instead of an expensive vacation to the tropics this year, why not try a "staycation"? A trip to the theatre or a local sports venue is infinitely less expensive than a sunburn and you’ll be infinitely less depressed when you return to work the next day.
Review your monthly plans for phone, wireless, Internet and television services. In general, households are paying significant sums for features that aren’t even being used. That includes everything from digital TV channel packages to wireless voice and data plans. Paying $30 a month for six gigabytes of data for your iPhone might seem like a good deal, but not if you’re only using 50 megabytes to occasionally check your e-mail and surf the web. Also, don’t be afraid to ask for a better deal from your current provider if they want to keep you as a customer – particularly if you subscribe to multiple services and have done some comparison shopping. If long distance phone calls are costing you a fortune, you might want to think about signing up for one of those $5 a month zero-cent per minute long distance plans, especially if you’re currently paying 25 cents a minute on your cell phone.

About Dominion Lending Centres Inc.
We are Canada’s premier online mortgage company, and one of the fastest growing mortgage brokerages nationwide!
Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
We work for you, not the lenders, so your best interests will always be our number one priority.
We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
We close loans in all 10 provinces and 3 territories.
We can process your mortgage in as few as 7 days.
We are the preferred mortgage lender for several of Canada’s top companies.
Dominion Lending Centres' Mortgage Experts are available anytime, anywhere, evenings and weekends — we'll even come to you!

Call Randy Johnson 

604-729-7063

rjohnson@dominionlending.ca

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Remaining Financially Proactive in Trying Times      April 2009

With the uncertainty of job loss racing through many homeowners’ minds these days, taking a proactive approach to this issue by putting mortgage payments aside while you’re still actively employed can help set your mind at ease.

It’s a wise move to set money aside each pay period so you can accumulate six to 12 months’ worth of mortgage payments in a short-term GIC as security for a possible job loss.

Planning for the future and potential job loss is one of the most important undertakings homeowners can make to ensure you can pay your mortgage in uncertain times.

And, best of all, if your job remains secure, you can take the money out of your GIC and make a pre-payment back on your mortgage on your anniversary date (or whenever your prepayment options permit you to do so), which can end up saving you thousands of dollars in interest payments and trim down the amount of time it will take to pay off your mortgage.

But if it’s not plausible to save money each pay period, refinancing to access the equity you’ve already built up in your home is another valid option for planning ahead in uncertain times.

In addition to freeing up money to store future mortgage payments in a GIC, some of the money can also be used to pay off high-interest debt – such as credit cards – and get you off to a fresh financial start.

You will find that taking equity out of your home to pay off high-interest debt can put more money in your bank account each month.

And since interest rates are at historic lows, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year.

There are often penalties associated with paying your mortgage loan out prior to renewal, but these could be offset by the extra money you save through a refinance. I will prepare a personalized spreadsheet to show you the costs of each of your options.

With access to more money, you will be better able to manage your debt.
Refinancing your mortgage and taking some existing equity out could also enable you to do some home renovations, take a vacation or even invest in your children’s education.

As always, if you want to talk about your financing options, I’m here to help.

How to Avoid the Fraud Trap

Each year, thousands of Canadians become victims of fraud. In response, the Bank of Canada and about 100 private and public organizations unite in a national campaign every March to raise awareness about fraud prevention. The following information may be useful in helping you identify and avoid common types of fraud.

Avoiding counterfeit bills
Counterfeiting is a form of fraud that can affect anyone who uses cash.
The impact of counterfeiting on individuals with limited means or on small businesses can be substantial. Following are some things you can do to help identify counterfeit currency:

1. Get to know your money. All bank notes have security features that
are quick and easy to use. Learn about these features at www.bankofcanada.ca/en/banknotes <http://www2.mambonetcom.com/cgi-bin/public/redir.pl?cid=952&rid=10745&i
d=305>

2. Expect the check. If you spot a cashier checking your money, think
of it as a routine authorization process – just like getting an electronic authorization for credit and debit card payments. It’s a safe business practice that helps protect the cash we all use.

3. Use only the latest, most secure bills. Older-style bills are less
secure than the latest bills that have a metallic stripe. If you are handed an older-style bill, ask for a newer one with the metallic stripe. Exchange older-style bills at your bank.

Avoiding other forms of fraud
Here are some quick tips for preventing other forms of fraud:

Identity theft

* Don’t give out personal information unless you have initiated
the contact or know who you’re dealing with.
* Before you reveal any personal information that identifies you,
find out how it will be used and if it will be shared.
* Pay attention to your billing cycles. Follow up with creditors
if your bills don’t arrive on time.
* Only give out your SIN when absolutely necessary. Do not carry
your SIN card.
* Minimize the identification information and the number of cards
you carry.
* Keep items containing personal information in a safe place.
Shred receipts, credit applications, insurance forms and any other sensitive financial documents.
* Promptly remove mail from your mailbox after delivery. Have
someone pick up your mail if you will be away.
* Watch the Bank of Canada’s video on avoiding identity fraud:
www.bankofcanada.ca/en/video_corp/dbo/dvd_fraud.html
<http://www2.mambonetcom.com/cgi-bin/public/redir.pl?cid=952&rid=10745&i
d=306>

Credit and debit card fraud

* Protect your PIN. Shield your hand so that no one can see the
numbers you are entering.
* Sign new credit cards immediately upon receipt. Promptly destroy
expired and cancelled cards.
* Never let your cards out of your sight during a transaction.
Watch for suspicious equipment or activity as a cashier swipes your credit or debit card.

Cheques

* Check for irregular-looking signatures, signs of erasing or a
lack of perforations.
* Check for holographic stripes, a watermark, special inks,
microprinting and copy protection.
* If you don’t know the person writing the cheque, ask for photo
ID.

Useful resources

* ABCs of Fraud: www.abcfraud.ca
<http://www2.mambonetcom.com/cgi-bin/public/redir.pl?cid=952&rid=10745&i
d=307> (includes a useful fraud quiz)
* Competition Bureau:
www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_00122.html
<http://www2.mambonetcom.com/cgi-bin/public/redir.pl?cid=952&rid=10745&i
d=308>
* Canadian Anti-Fraud Call Centres: www.phonebusters.com
<http://www2.mambonetcom.com/cgi-bin/public/redir.pl?cid=952&rid=10745&i
d=309> or 1-888-495-8501
* Fraud Squad TV: www.fraudsquadtv.com
<http://www2.mambonetcom.com/cgi-bin/public/redir.pl?cid=952&rid=10745&i
d=310>

Bank of Canada: www.bankofcanada.ca/en/banknotes <http://www2.mambonetcom.com/cgi-bin/public/redir.pl?cid=952&rid=10745&i
d=311> ; education@bankofcanada.ca; or 1-888-513-8212

Thank you for taking the time to read this.

Call Randy Johnson 

604-729-7063

rjohnson@dominionlending.ca

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P2P – It’s More than Just Sharing Songs

by Alex Daley, Senior Editor, Casey’s Extraordinary Technology

You know that house down the street that’s for sale? The gigantic castle of a house, with an uncut lawn, a few weeks away from foreclosure? That’s your fault. After all, it was you who loaned the former owners the money for the house they could never afford.
No way, you say? You’d never have loaned any money to that irresponsible hack. But of course you did lend it to him… just not directly. That’s what banks are for -- lending your money to other people, often people just like the owner of that house.
Forgetting for the moment how modern finance found a way to twist and pervert the banking system to its breaking point, for hundreds of years the foundation has been one of shared benefit and distributed risk. You keep some portion of your savings in a bank, and in exchange they share back a percentage of the proceeds from lending your money to others (including Mr. Irresponsible), keeping a cut for themselves.
That’s been the only option. Until now…
If the Internet is good at one thing, it is connecting large numbers of people to each other. Thus it seems only logical that the Web would be a more efficient way of matching lenders to buyers than any one local or even national bank. Electronic systems can connect people at scale, automating an otherwise manual process and eliminating scores of middlemen from the process. And that is exactly what a handful of new lending institutions on the Web -- such as www.prosper.comand www.lendingclub.com-- are starting to do.
They call it “peer-to-peer (or P2P) lending,” and the premise is simple: I have money I am willing to lend; you would like to borrow some; these companies bring us together and facilitate the loan. Because their systems are automated and connect lenders and borrowers more directly, the companies can afford to take much smaller commissions on the loan than a traditional bank.

As a result, you enjoy a much higher yield than on your savings account, and they attract borrowers by undercutting bank rates. Prosper’s returns for lenders average 7.02% for the highest three credit grades (the only data they make available). Lending Club averages 9.62% across all loans for investors. And credit is available to borrowers as low as 7.89%, much cheaper than most banks.
An investor can diversify by bidding to fund portions of many loans, in increments as low as $25 each. A $5,000 loan might be spread across as many as 200 individual lenders, each choosing to purchase a $25 note. The process is largely invisible to the borrowers, as they receive just one payment and pay just one bill. The companies collect and distribute the payments to each lender, proportionally to the amount each funded.
One of the more interesting, and unconventional, aspects of the sites is the way they use social networking tools to provide lenders and borrowers with a way to connect more directly. On each site, borrowers are required to provide not only credit history and similar information, but a brief personal statement on why they want the loan, and anything else they think is relevant. Lenders can browse the loans and pick specific people and specific requests they want to fund. Prosper.com takes this farther than LendingClub.com, allowing borrowers to add photos and encouraging more dialogue -- on Lending Club, the descriptions are often just simple half-liners like “Buying a used Acura RSX.”
Browsing the loan requests provides a fascinating peek into what people borrow money for (weddings, used cars, debt consolidation, and home repairs look to be the most common, in no specific order), not to mention their credit histories, borrowing habits, and even spelling and grammar…
This technique of hand picking loans only scales so far, especially when lending $25 at a time. So both lenders also offer automated matching of loans to your criteria (loan amount, credit score, etc.). Prosper.com’s system is more automated and much simpler to use, but both are adequate for the job.
Of course, you also lose the liquidity that comes with indirect vehicles like bank accounts. But both lenders try to address this issue by packaging your loans as notes and allowing you to trade the notes in a market provided by FOLIOfn. Prosper.com has only recently restarted lending after a government-mandated quiet period while their note model was reviewed by the SEC, so activity on their trading platform is limited as they build the network. However, the Lending Club version is working smoothly, providing decent near-term liquidity options (and some good opportunities for arbitrage, we imagine).
If you’re looking for a way to diversify some of your investment activity beyond traditional stocks, bonds, futures, and the like, P2P loans could make for an interesting choice. Or if you just want to try the next new thing, they make for an entertaining way to play banker for a day (or 36 months, the length of the loan terms on both sites).
Technology is the number one growth industry in the U.S. – and many of those investors who have kept their eyes open for new, promising tech developments have been making fortunes in the process. Just think of the lucky people who invested in Google when it was still a small startup.
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