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What’s New

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Want to stay in your home forever? Be aware of the costs of home care

Home, $weet home.

That’s an appropriate headline for your financial plan if you intend to stay in your house for the long term rather than move to a retirement community. Solid arguments can be made for aging in place, but there will be ever-growing expenses. Plan for them rather than having them take you by surprise.

Baby boomers may have the most intense relationship with their homes of any generation in this country’s history. Houses give them both emotional and financial sustenance, although the latter benefit is more complex than you might think.

As described in this recent column, owners in Toronto are hanging on to their houses rather than selling into a market in which prices are soaring. Fear of missing out on further gains is a factor, and so are the harsh economics of a hot housing market. Money made from selling a house at a nice profit may disappear into the cost of buying another home that has also appreciated.

Click here to read the rest of the Globe and Mail article

 

 

 

A finance exec says the best way to teach your kids about money is also the hardest

Capture02Parents are taking on the financial burden of their children more often than they should, a finance executive says.

And that might be doing their kids more harm than good.

“It’s important to not always have mom and dad come in and save the day, because if you save the day, the lesson they learn is that mom and dad will be there to bail you out,” Brie Williams told Business Insider.

Williams is the vice president and head of practice management at State Street Global Advisors.

She suggests letting children make healthy financial mistakes instead.

Rather than spoiling them, that could mean letting them face the consequences of missing a cellphone bill payment or not budgeting for what they need. She outlines some more scenarios in a blog post.

“Making small mistakes while they’re still in a protected, secure environment at home — something that’s as small as a phone bill — are easier lessons to learn in a safer environment,” Williams said.

In addition to raising children to be financially educated, it’s also important to keep the topic of money open.

Click here to read the rest of the Yahoo! Finance article

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Now, more than ever we want to give back to the community!

Click here to see how you can help!


Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community Great!

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Tax data shows first-time buyers such as millennials are jumping into Alberta housing again

Millennials appear to be buying into the Canadian housing market with new zeal and the beleaguered Calgary and Edmonton markets are prime beneficiaries of a boost in first-time buyer purchases, new tax data shows.

The survey from TurboTax examines the use of the first-time homebuyer credit — a non-refundable tax credit of up to $5,000 calculated at 15 per cent and worth up to $750 in actual savings. The company won’t reveal the size of the survey for competitive reasons, but says it is “statistically significant.”

“Every little bit helps. It might let you buy a new coat of paint on your house,” said Robin Taub, a spokesperson for TurboTax and a chartered professional accountant, referring to the tax break.

The data provide a glimpse into buying activity of first-time buyer thought to be key to a continuing real estate boom. The tax software company found 3.1 per cent of millennials filing their tax returns with the software were taking advantage of that credit, as of April 2016. That was up from 2.4 per cent a year earlier.

Alberta’s two largest cities, where real estate sales have been hit by the slump in oil prices appear to be benefitting substantially from the increase in first-time buyers, many of whom are thought to be millennials, generally defined as ages 18 to 34.

Click here to read the rest of the Financial Post article.

 

Capture89Helping Homeowners in Need

Your insurer’s Homeowner Assistance Program is designed to help homeowners who are experiencing temporary financial difficulties as the result of an unexpected life event, which may put their mortgage at risk. You might be eligible for your insurer’s Homeowner Assistance Program at no cost.

Situations that qualify under the program

There are a variety of situations that may affect a homeowner’s ability to make their mortgage payments. Some common situations include:

  • Job loss or reduced income
  • Marital separation
  • Unexpected illness or disability

If you have any questions about this program, please feel free to contact The Mortgage Centre

Renewing your Mortgage

It is crucial that we work together prior to your renewal date to ensure that you continue to benefit from the best mortgage terms and interest rates available on the market.  When it comes time to renew or refinance, we will make sure you get the best deal again!

Moving forward with your mortgage product, we continue to be your best resource for information and guidance. We can advise you when it comes to the terms of the mortgage and approximate payout amounts. Please call with any account related questions and we will work together to get the answers you need.

Click here to read the rest of the Genworth article.

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Now, more than ever we want to give back to the community!


Click here to see how you can help!


Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community great!

 

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Welcome to the February issue of the Mortgage Financing Journal, which is designed to help keep you in the know regarding Real Estate and Mortgage related matters!

This month’s edition explores various ways to decrease your debt and ways to make sure you’re in good financial health.
Please let us know if you have any questions or feedback regarding anything outlined below.

Capture2.16How To Pay Off Debt Faster –
25 Secret Tips Your Banker Doesn’t Want You To Know?

  1. Make a double mortgage payment whenever you can. Doing this once a year can shave over 4 years off the mortgage! Sometimes you can skip a payment later on too?if you really, really need to. Try not to. If your payment is $2,000 a month, four years of no payments is $96,000!!
  2. Increase frequency of payment. For Example going from monthly to bi-weekly accelerated can shave over three years off your mortgage! $2,000, three years of no payments is $72,000!!3. Increase your payment. For example a one-time 10% increase can shave 4 years off the mortgage. That’s $96,000! Imagine if you bumped the payment 10% every year from the get go!!! You would be mortgage free in 13 years! Start to finish! Can’t do it? How about 5% every year…you would be mortgage free in 18 years! How about increasing the payment by the amount of your annual raise?4. Lump sum payments…same idea…mortgage is gone way faster! Even just one payment a year equivalent to 1 monthly payment will give you similar results as #2 above! How about using your annual work bonus?
  3. Renegotiate whenever rates drop to save interest and pay mortgage faster! Generally a good idea however *Caution* get independent professional advice (a cost benefit analysis) to make sure it makes sense for you at that time. We can help. A 1% reduction on a $300,000 mortgage will save $250 a month…times 5 years…that’s $15,000!!6. Keep your credit rating high for best rate. Always pay on time. Never let payments slip past their due date. Always keep balances low in relation to credit limits on credit cards, lines of credit, etc. 50% or less is best even if you pay the balances in full every month. What generally reports to the credit bureau is the statement balance each month. So if your credit limit is $3000 and you are running $3000 a month through the card each month (to collect all those points you never spend or can’t use in blackout periods) and paying in full, it will look like you are maxing out your credit limit and your credit score will drop accordingly.7. Increase your mortgage! Yeah I know sounds backwards! Do it to roll in your credit cards, line of credit, car loan etc for a better rate and a set payment plan. Oh you say you don’t want to extend the repayment period of that stuff by rolling it into your mortgage or you have a low or promo rate credit card (those never end well) I agree! Then keep the total payment amount the same but pay it in one neat monthly payment to the increased mortgage.8. Make an RRSP contribution and use the refund to pay down your mortgage.9. Go variable rate with your mortgage but keep payments as if fixed rate. Variable rates usually win out over fixed rates. By paying a higher payment you will pay off the mortgage faster. It’s also a buffer in case the rate rises above the fixed rate for short periods of time. *Caution* variable rates are not for everyone. Get independent professional advice to find out what is best for you. We can help!10. Take your mortgage with you when you change properties to avoid penalty or higher rate on a new mortgage. This is called “porting”. Make sure that your mortgage has this feature. It is not widely known and could save you a ton of dough.

    11. Set up auto savings every paycheque, even $10, when it reaches the amount of one mortgage payment, apply it to the mortgage. This concept goes nicely with #4 above.

    12. Unhook from the money drip…stop paying with your fancy points credit or debit card. Way too easy to overspend! Go old school, go off the grid…PAY CASH, it works!

    13. Don’t ever buy on layaway, you know, six months don’t pay schemes. You think? No problem I’ll just pay it in six months, it will be okay. Yeah right!

    14. Downsize your house. Two good friends and clients of mine, having followed many of the tips here, are in great shape except they have a six bedroom house! Two people, six bed house-go figure! They are nearly debt free so no biggy, but can you say the same? Circumstances change, make the adjustments along the way!

    15. Don’t want to move? Convert the basement/rooms to rental and use the income to pay down debt.

    16. Convert your mortgage to tax deductible. If you are self-employed, own rental property or have investments, this is likely possible. We won’t go into details here, just ask us how.

    17. Have a payment priority.

    18. Pay off the highest interest rate first.

    19. If you have tax deductible loans, pay them off last, slowest. Pay the non-tax deductible loans first and fastest.

    20. Pay off ugly debt first. Stuff like credit card purchases.

    21. Payoff bad debt next. Stuff like car loans, boat loans. Things that depreciate in value.

    22. Pay off good debt (or shall I say “not so bad debt”) last. Stuff like mortgages, investment loans. Things that hopefully appreciate in value.

    23. Buying a car? Finance it if you have to, don’t lease! *Exception* If you are self-employed it might make sense.

    24. You have $20,000 in a secret bank account for a rainy day fund and $20,000 owing on a line of credit. Seriously? The bank account is paying you next to nothing (which is taxable income to boot) and the line of credit rate is way higher (and not tax deductible). You know what to do. You can keep the line of credit open and on standby for rainy day funds. Make it the secret line of credit that you have but never use.

    25. Give your Banker more money. No really. Keep enough in your chequing account to meet the minimum requirement to waive your service charges. My bank charges $10 a month for 25 transactions and nothing, zero, zilch, zip if I keep $2,500 in the account. Let’s see $10 x 12 is $120 a year to pay off debt. I’d have to earn 5% with the $2,500 in my savings account to come out ahead. No brainer here. Oh yeah, if you need more than 25 transactions a month see #12 above.

    26. BONUS TIP and MOST IMPORTANT. Let’s face it, you’re not the Government and you’re not a Bank, you can’t run deficits forever and you won’t get a bailout, Stop procrastinating already! See 1 through 24 above and take action now!

    Side note: *Caution* beware of some too good to be true ultra-low rate mortgages. These “no frills” mortgages are often loaded with restrictions like pre-payment limitations, fully-closed terms, stripped-out features, or unusual penalties. You really need to compare product to product. If you’re not looking at what you’re giving up, you may regret it in the future. This alone could prevent you from taking advantage of tips #1, 2, 3, 4, 5, 7, 8, 9, 10, 14, 16 and 22!

Capture2.17Financial Check Up

Welcome to your free financial check-up, discussing 5 key factors to assist you in ensuring you are on the right track to a solid financial future.

Credit

Ensuring you are using credit wisely will pave the way to making sure you have options available to you if or when you need them. One thing we can all do is check our credit report on a regular basis – at least once each year – so you know where you stand and whether your credit score has been compromised in any way, especially through fraud. You can contact Equifax at 1-800-465-7166 or go to the website at www.equifax.ca for more information.

There are many people who believe that it is more responsible to not use credit at all but, in fact, if you don’t have any credit accounts reporting to the credit bureau, financial institutions have no way of knowing how responsible you are with credit and you will likely be turned down if you need a loan or credit card in the future.

Making payments on time is critical to maintaining a good credit score but also keeping your account balances below 75% of the maximum limit is another way of boosting your credit score. If you have multiple accounts, spreading the balances evenly among them using balance transfer methods can help to bring some accounts in line.

It’s wise to pay off your higher interest credit accounts first but that decision needs to be balanced with whether to pay down the higher-payment accounts.

Savings

The old adage, “10% of the money you earn should be tucked away into savings” is a good one. Although it may be difficult to be disciplined enough, if you “pay yourself” every month, the savings will start to build and you may find you don’t need to rely on credit to handle those unexpected expenses.

Have a monthly allotment that you transfer to your savings account the same day each month. Set a reminder in your phone to physically do the transfer and build it into your budget as if it were another utility payment you have to make.

Taking advantage of a Tax Free Savings Account (TFSA) is a great way to earn higher interest on your savings as opposed to the low rate you are paid for a standard bank savings account. If your TFSA is managed by a Financial Planner you can see very good returns on your investments. Any money earned within your TFSA is tax-free and can be withdrawn at any time.

Retirement

Part of the savings picture is, of course, planning for retirement. If you can, work an RRSP contribution into your budget as soon as possible so you will be much further ahead when you want to put your feet up and enjoy.

Follow your Financial Planner’s recommendations when it comes to how much you contribute each year.

Contributing to an RRSP also gives you a tax break at the end of the year and you can use your tax return money to put towards paying down your mortgage or put it towards a vacation. Both of those are win-win scenarios.

Mortgage

Being the largest loan most Canadians will ever have, your mortgage deserves attention and regular check-ups. Choosing the right mortgage structure for you and taking advantage of today’s historically low rates, can put you on track to huge savings.

Take a look at your debt-structure. If you are making high monthly payments on high-interest loans and/or credit cards, you could easily restructure your circumstances by refinancing your credit accounts into your home. In most cases, this reduces the amount of interest you are paying overall and lowers your monthly payments. At the same time, if you take advantage of an accelerated payment structure (bi-weekly or weekly) and bump up your minimum required payment by the 15-25% that your institution allows, you can pay down your principal and be mortgage free much sooner!

In today’s mortgage climate, if you currently have a mortgage rate anywhere over 4% you should do yourself a favour and have me do a Free Mortgage Analysis for you so you can see apples to apples whether there are any financial advantages to breaking your existing mortgage for a better rate. When you can see the costs vs. benefits in black and white, the answer as to whether to refinance will be crystal clear.

Insurance

Making sure you have adequate insurance is essential in protecting yourself and your family in the event of a crisis or emergency. Whether it be home, health, life or disability insurance, it is always a good idea to review all of your insurance coverage at least once a year to make sure you are fully covered.

Mortgage insurance is a great idea but most clients benefit more from having independent mortgage insurance coverage as opposed to taking the insurance coverage offered by the institution that has your mortgage. The average Canadian makes a change to a mortgage every 38-42 months, you may have to re-apply for the same coverage at an older age and higher premiums. If your mortgage insurance is through a company that is independent of the bank, you would have the ability to keep the coverage and premium you initially had even if moving your mortgage to another institution at a better rate works better for you.

Another way to go is Term Life Insurance. Securing a policy that will cover all costs and pay out all obligations should anything happen to you will give your family peace of mind in the worst circumstance.

Critical Illness Insurance offers protection should you become affected by one of the approved conditions and is often paid in a lump sum amount once you have survived the specified waiting period. It gives you the assurance that the costs of a serious medical condition, as well as living expenses, will be covered.

Wrap Up

Hopefully you have found some value in the information provided. As always, we recommend seeking out the experts and gaining knowledge before making any important decisions that will affect your future.

 

 

 

Fresh start for 2016…

That’s it! We’ve done it. January is finally over and while most of us have made New Year’s resolutions, there are still a few simple things that can be done in order to maximize your time and organization. Click here to find out how some small changes can make a big difference for the year of 2016!

Did You Know…

TFSA’s are much more than a savings account? Learn more about the rules and tips here on contributing to a tax-free savings account!

 

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Welcome to our Monthly Newsletter!


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 Understanding how mortgage payments work

Q: I pay my mortgage monthly. Six months ago I increased these payments by an extra $400. Despite this extra money, the interest amount is still roughly the same on the mortgage. Is that normal? Shouldn’t the interest portion be reduced since I’m making extra payments?

— Mortgage math confusion, Kelowna, B.C.

Answer No. 1: The general misconception is that the more principal you pay off, the smaller the interest portion on your monthly mortgage payment. The problem is it’s not a $1 for $1 ratio. To appreciate how this works, let’s assume you take out a $500,000 mortgage at 2.49%, amortized over 25 years. To carry this mortgage, you would be required to pay $2,237 per month. Over the five year term of your mortgage, you’ll pay $76,896 towards the principal and another $57,345 in interest payments. Now, if you had started your extra payments in the first month of your five year term, your monthly payments would still be $2237, but you would’ve paid $102,417 against your principal (and about $55,800 in interest payments).

Jake Abramowicz operates as Mortgage Jake and has been a full-time mortgage agent for the past 12 years. Specializing in the residential market, Jake helps financing for every kind of borrower including prime, alternative prime and self-employed. A top agent with Mortgage Edge, Jake thoroughly enjoys working with people and looks forward to helping you answer any mortgage-related questions.

Answer No. 2:  Your mortgage payment is calculated on the outstanding balance of your mortgage so extra payments you make won’t be so noticeable on a month to month basis. That’s because the interest portion of your payment makes up a much larger percentage of your total payment at the beginning of your mortgage terms (say in year 1) then towards the end (say year 25).

It’s important to recognize that your extra $400 goes towards reducing your overall principal balance. By consistently making extra payments you will reduce the amount of interest you pay, saving you a large amount money over the life of your mortgage.

Walter Melanson is the co-founder and lead analyst at PropertyGuys.com, Canada’s largest private sale franchise network. A background in finance, economics and technology, Walter’s true passion lies in building a more modern approach to buying and selling real estate.

Answer No. 3: Any time you make extra mortgage payments, it goes straight to reducing principal. With a lower principal balance, you’re charged less interest each time you make a payment. If you have a long remaining amortization and/or a very large mortgage size, you might not notice a drastic change in interest each month—at least for the first few years. But paying an extra $400 a month can save someone literally years off his or her mortgage.

Robert McLister is a mortgage planner at intelliMortgage and founder of RateSpy. You can follow him on Twitter at @RateSpy

Click here to see the article from moneysense.ca

 

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Step up your kitchen floors

You’ve paid a bundle for your countertops, cabinets and appliances and with the right flooring all this effort will make your new kitchen shine and sparkle. New kitchen floors are a chance to make a statement—it’s also a chance to spend money on an inferior or a superior product. That’s because the true test of a great kitchen floor is how it stands up to everyday life. ConsumerReports.org tests the different flooring options you can use in a kitchen renovation and finds the best options aren’t always the most expensive.

Click here to read the rest of the moneysense.ca article

Renewing your Mortgage

It is crucial that we work together prior to your renewal date to ensure that you continue

to benefit from the best mortgage terms and interest rates available on the market.  When

it comes time to renew or refinance, we will make sure you get the best deal again!

Moving forward with your mortgage product, we continue to be your best resource for

information and guidance. We can advise you when it comes to the terms of the mortgage

and approximate payout amounts. Please call with any account related questions and we

will work together to get the answers you need.

 

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Now, more than ever we want to give back to the community!


Click here to see how you can help!


Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community Great!

 

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Welcome to the January issue of the Mortgage Financing Journal, which is designed to help keep you in the know regarding Real Estate and Mortgage related matters!

A New Year is upon us and there is no better feeling than starting it off right! Set goals, put action plans into place and make sure to set yourself up for success!

This month’s edition explores the rise and fall of rates and creating sustainable neighbourhoods. Please let me know if you have any questions or feedback regarding anything outlined below.

Will Interest Rates Rise, or Will They Fall?

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Over the past few weeks interest rates, specifically longer term (5 year term) fixed rates, have risen on average 0.25%. Not a massive leap, and not the beginning of the end of low rates by any stretch.

Understanding the Basics

Fixed interest rates are predicated on the bond market. Where the bond market goes is where longer term (4yr – 10yr term) fixed rates follow.

Over the past few weeks the bond market has seen new life, and thus rates have risen slightly. This is partly due to speculation around the new federal government’s expensive commitments to inject many billions of dollars into the economy. These will be good for business, and in turn should further fuel a recovery in the bond market, making investors happier.

For those seeking longer-term fixed-rate mortgages there will be less happiness, although to be fair, for some time yet interest rates are likely to remain quite close to the record lows we have enjoyed.

Variable-rate mortgages, and to some extent 1, 2 and 3yr fixed-rate mortgages, are predicated on the Bank of Canada’s Prime rate, which saw two 0.25% cuts earlier this year. It’s currently at 2.70% with lenders, who passed only a 0.15% reduction on to the mortgage market.

(Side Note: When the Bank of Canada increases rates by 0.25% again, will lenders increase their Prime by only the 0.15% they cut, or will we get two partial cuts, but the full lump on an increase? Time will tell.)

The Bank of Canada has repeatedly said that what happens in the real estate market is not a significant part of their decision-making process; instead movement in the Prime lending rate is more of a large lever designed to guide the nation’s economy as a whole. The manic goings-on in two cities’ housing markets (Vancouver and Toronto) do not play a material role and are instead, to some extent, a by-product, not a basis for decisions.

Most notable were recent comments by our new Minister of Finance, Mr. Bill Morneau, in his Fall Fiscal Update which referenced a ‘stalling economy’ and a reduction in expected economic growth from 2% to perhaps 1.2%. These are clear indications that the Bank of Canada is unlikely to increase Prime any time soon.

Consider that the idea of the Liberals’ commitment to infrastructure spending is an attempt to step on the gas pedal and power up the economy. Then, equally, consider that a Bank of Canada increase to Prime would be akin to stepping on the brake pedal of the economy. It seems reasonable to expect some degree of volatility in the bond market and thus longer-term fixed rates – and equally reasonable to expect stability when it comes to Prime – and thus stability for variable-rate mortgages and shorter-term fixed-rate offerings. Low rates are here for some time to come, albeit in a different form than we have grown accustomed to.

Paying your mortgage down faster

The best way to prepare for potentially higher rates is to have a lower mortgage balance come renewal time. If you truly want to take advantage of today’s low rates, there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments.

Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 15% or 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money. Few of us have such lump sums, mind you.

A more reasonable and highly effective approach is to increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but are guaranteed to save you a significant amount of money over the term of your mortgage.

Even just adding extra, e.g. $25.00, $50.00 or if you can $100.00, to your mortgage payment each passing year will have a powerful cumulative effect over the term of your mortgage. As always, if you have any questions about refinancing, reducing debt or paying down your mortgage quicker, I’m here to help!

03Start clean …

Starting a new year is starting fresh. It’s a great opportunity to clean out your living space, mental state and figure out to proceed with your career and business goals. Here are a few tips that will help you take the steps to personal and business success in 2016!

 

Creating Sustainable Neighbourhoods

A neighbourhood with sustainable features is one that meets your needs while protecting the environment and leaving an affordable legacy. This type of neighbourhood offers homes that are located near shops, schools, recreation, work and other daily destinations. Like a village, these places are a pleasant, convenient and safe walk, cycle or bus ride from home. This helps you reduce driving costs and enjoy the health benefits of walking and cycling. Land and services, like roads, are used efficiently. Old or new, they also feature a choice of homes that you can afford.
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Did You Know…

  • The Heart and Stroke Foundation of Canada recommends at least 30 minutes of exercise every day, like walking or biking, to reduce the risk of obesity, heart disease and stroke. Where homes are within walking distance of stores and other services, people are 2.4 times more likely to meet the 30-minute minimum than those in homes that are not within a convenient or pleasant walk to stores/services.
  • The average annual cost to own and operate a car in Canada is $9,000+. If you can eliminate the need for a second car, drive less or avoid having a car at all, that’s money in your pocket.
  • A two-storey detached home loses 20% more heat than a semi-detached one, and 50% more than a middle home in a row of townhouses of the same size with the same heating system, insulation and windows.
  • Trees shading your house can make it feel cooler in the summer. Healthy trees also increase your property value. They intercept rainwater, improve air quality, and make streets and public spaces more comfortable and attractive.
  • Asphalt surfaces, like parking lots, can make urban areas hotter than the surrounding countryside in the summer. With less asphalt surface, neighbourhoods are more attractive and land-efficient. In mixed-use neighbourhoods, fewer parking spots are needed because places with high daytime needs, like offices, are close enough to share parking with places that need more parking at night, like homes and restaurants.
  • Cars are a major source of smog in urban areas, so driving less helps everyone’s health, particularly children, the elderly and people at risk for cardio-respiratory problems.
  • Half of the greenhouse gases from energy use by individual Canadians come from passenger road transportation, like cars. In the Toronto area, greenhouse gases from weekday passenger travel generated by people living in mixed-use, pedestrian and transit-friendly neighbourhoods near the urban core are about 1/3 of those by people living in dispersed, strictly residential neighbourhoods on the urban fringe.

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Welcome to our Monthly Newsletter!

 Capture101

102Ottawa’s new mortgage rules take aim at ‘pockets of risk’ in housing market

The Liberal government is overhauling the rules governing the mortgage industry in a bid to target what it said were “pockets of risk” in the housing market.

The three-pronged approach includes doubling the minimum down payment for some home buyers, increasing the fees charged to lenders that securitize government-backed mortgages, and proposed changes that could require lenders to hold more capital against some insured loans in order to curb mortgage fraud and to slow rising levels of household debt.

Taken together, the new rules represent the most sweeping changes to the housing market since 2012, when the previous Conservative government last moved to tighten mortgage lending requirements, and should restrict access to new mortgage financing next year, industry watchers say.

Click here to read the rest of the Globe and Mail article.

How to Make a Turducken

What is a Turducken? A Turducken is a turkey, stuffed with a duck, stuffed with a chicken. Turducken is a dish popular in Louisiana. After reading this article you will be able to (and should) make a Turducken. You will not be told, however, how to eat it, or how to make gravy. Read this thoroughly, as if you were instructing someone, before attempting the recipe. It’s a long process that requires a lot of work!

Click here to find the recipe to make a Turducken.

 

The Cause way logo jpeg

 

Now, more than ever we want to give back to the community!


Click here to see how you can help!


Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community Great!

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Welcome to the December issue of the Mortgage Financing Journal, which is designed to help keep you in the know regarding Real Estate and Mortgage related matters!

The holiday season has finally approached us! Bundle up, grab a cup of warm cocoa and enjoy the festivities with family and friends.

This month’s edition explores rent vs buy options and what questions you should ask during an open house.
Please let me know if you have any questions or feedback regarding anything outlined below.

Please let us know if you have any questions or feedback regarding anything outlined below.

Rent vs. Buy

At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. And purchasing a home is one of the biggest decisions most people ever make.
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Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.

Some advantages of buying a home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.

Each month when you make your mortgage payment, you are building equity in your home.

Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.

At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate.

Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate-or increase in value-as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a more expensive home in the future thanks to the profit you’ll make when selling your current home.

As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community.

If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams.

Real estate is, however, usually considered a good investment over the long term.

When making the decision about whether to buy or rent, it’s important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but, ultimately, it’s a personal decision based on your own priorities.

6 Questions to ask during an Open House

Romana King
Contributed to Moneysense.ca
http://bit.ly/1QjMhip

03An open house is the real estate world’s version of window shopping. It’s an opportunity to sneak a peek at a neighbour’s home, and a chance to size up a potential house or neighbourhood.

But for most window-shoppers, ignoring or minimizing talk with the real estate agent at an open house lands somewhere between a challenge and a sport. It shouldn’t. While there’s no question that the realtor hopes to drum up business by holding an open house, they can also be a wealth of information. It’s just a matter of asking the right questions. Here are six questions to ask at the next open house you visit.

1. Why do the sellers want to move? Listen, we all read the same real estate advice, so it’s quite unlikely the agent you ask is going to tell you the full story but even a partial story-or no story at all-can help.

Take, for instance, the absolutely stunning semi-detached I recently showed to a growing family. Like many urban Toronto homes, the bedrooms were on the smaller side and there was only one bathroom to share for the entire family. But the location was ideal and the sellers had obviously spent a great deal of time and money upgrading and renovating the home (they’d even documented and displayed the progress of this work in a photo album that was open for all to see). So, why move? Was it because with baby number two they were running out of space? Turns out the husband had gotten an extremely lucrative job promotion but it now forced him to commute 90 minutes north of the city. The move was to accommodate the new job, not because the house was too small for a growing family.

It’s unlikely that the agent will tell you that the sellers hate all the crime in the area or that the train tracks keep them awake at night, but by asking and carefully listening you can usually read between the lines. Then use this information to assess whether or not these factors will impact your future enjoyment of the property.

2. What’s the seller’s timeline? While price is king in real estate negotiations, quite often a choice between two very similar offers comes down to timing. If a seller need to move quickly-perhaps because of a job relocation-or they want a longer close (perhaps to let kids finish out their school year) you can increase your chances of winning a bid. That’s because the more you know about a seller’s motivation the easier it is to craft a tempting offer.

3.  When was the roof/electrical was last updated? Granted, many real estate agents won’t be able to answer this off the top of their heads, but the information should be documented somewhere (perhaps in a pre-sale inspection). If the information isn’t documented and you’re interested in the home, you may want to pay particular attention to the number of necessary upgrades that have been made (as opposed to the decor upgrades).

Also, by asking these questions at an open house you can validate the answer on the spot. For example, if the roof is reported to be only two or three years old, but you see obvious wear signs in one area then it may be a sign of an unknown problem that will need to be addressed (and that usually costs money).

Asking about non-sexy upgrades, like roof replacements or electrical wiring, also helps you keep a mental checklist of the maintenance and expense required on the home for sale.

4. Are there any issues with the home? This is a loaded gun question. Real estate agents are legally bound to disclose all known structural defects and code violations about a house-but they may be limited by how much a seller will disclose.

That doesn’t mean you shouldn’t ask this question. If you’re lucky, a talkative agent or seller might reveal information about smaller, fixable issues. For instance, an old backdoor could have flooding problems during extreme rainstorms. While this may only happen once or twice a year, the havoc a flood has on your home and your belongings can be ghastly expensive. Knowledge of this issue would allow to budget and prioritize a fix-and prevent any unexpected surprises.

5. Where can I get a bite to eat? Want to know if the neighbourhood is vibrant and alive? Or if the neighbours stick to just their own backyards and rarely come out for a chat? Just ask the realtor where the local restaurant or coffee shop is located. If there’s a retail strip close by that locals frequent and feel proud of, chances are, you’ll love it too.

  1. What are the neighbours like? Listen, if the sellers are moving because of the neighbours, it’s highly unlikely you’ll be the first to know…but asking this question should elicit helpful information. For instance, does the agent mention kids or dogs? Is there a thriving bar scene at the local pub on the weekends? Is there a very active fire hall down the street? All of this is information that can help you assess whether or not the street and neighbourhood are right for you.

Santa Stress…

The holidays are meant to be fun and joyful, but sometimes they can become overwhelming and stressful instead. Check out a few simple ways to decrease stress and help you enjoy the holiday season.

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Office: (403) 380-2211           534, 18th Street South, Lethbridge, AB         Toll Free: 1-800-513-4449

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Welcome to the November issue of the Mortgage Financing Journal, which is designed to help keep you in the know regarding Real Estate and Mortgage related matters!

Fall is finally here and I hope you are enjoying the beautiful weather!

This month’s edition takes a look at what to expect for your family finances under a new Liberal government and who to call when getting a mortgage!
Please let us know if you have any questions or feedback regarding anything outlined below.

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We have seen no shortage this year of headlines from ‘credentialed’ observers of the Canadian Real Estate market from around the world loaded with dire forecasts.

Another year another story of the IMF, a foreign banks analyst, or some other entity making predictions about a market that does not exist. There is no National Real Estate market, and forecasts about Canadian Real Estate are as useful as forecasts about Canadian weather

Here are a few things about the home that you own which most of these analysts seem not to consider:

  • You live there and you have to live somewhere. You are not leaving very easily.
  • Canadian mortgages are ‘Full Recourse’ mortgages. You cannot throw your keys on the banker’s desk and walk away, the banker will follow you wherever you go and they will get the very last pennies owed to them.
  • Canadian mortgage qualification standards are among the most stringent in the world. Despite this many CDN’s borrow significantly less than they qualify for. We CDN’s are a prudent bunch.
  • Unlike the stock market, where a position can be liquidated with the click of a button, liquidating Real Estate is slow, cumbersome, and often tedious. Taking weeks, if not months.

On this final point, many a Real Estate investor can attest to wishing that at 4am, when roused from a deep slumber, and racing to a tenant’s property to stop a leaking pipe flowing into the unit below – that if there were a ‘sell’ button it would get pressed at that moment.

Just as many a homeowner, watching tall trees swaying near their home in a windstorm (or worse) would also press that button ‘just to be safe’.

But Real Estate is neither bought nor sold in split seconds, often logic exits the equation as well. Instead nearly every purchase and sale decision around Real Estate is driven by emotion – emotions which are driven by life circumstances.

Wonderful circumstances drive purchases and sales alike. Just as challenging circumstances can drive sales and possibly purchases as well.

Understanding that you are emotional is the first step. The next is enlisting your best allies;

  • A level-headed Realtor.
  • A level-headed Mortgage Broker.

The right team will protect you from selling too low, buying too high, moving too quickly, and even from moving too slowly.
Seek professional guidance, a third party that will offer perspective that could be missing from an otherwise overheated experience.

We are here for you.

Nine Ways your Family Finances will Change under a Liberal Government

Rob Carrick
Contributed to The Globe and Mail
http://bit.ly/1PxnYy0

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Here are nine things you need to know about how your personal finances will change under the new Liberal government. These points are based on measures the party campaigned on prior to the election Monday.

1. Middle class tax cuts: People with taxable income between $44,700 and $89,401 will save as much as $670 per year on their income taxes.

2.
Tax increases for high earners: The Liberals will increase income taxes on people making more than $200,000 a year. At $300,000, the extra tax would amount to $3,330; the top combined federal and provincial marginal tax rate will be above 50 per cent in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia.

3. Changes to the TFSA limit: The annual contribution limit would likely fall back to $5,500 from the current $10,000.

4. Goodbye, Family Tax Cut: This current income splitting measure allows the higher-earning spouse in a family with kids under 18 to transfer up to $50,000 of income to the lower-earning spouse so it can be taxed at a lower rate. The maximum tax break under this measure is $2,000.

5.
A new Canada Child Benefit: This will replace the current Universal Child Care Benefit and provide an extra $2,500 a year or so for a typical family of four. Families with household income of $200,000 or more will not receive this benefit.

6.
OAS at 65: The Liberals have said they would not go ahead with plans to gradually raise the age of eligibility for Old Age Security by 2023.

7.
CPP Enhancement: The Liberals have talked about working with the provinces to bolster Canada Pension Plan benefits. This calls into question the future of the proposed Ontario Retirement Pension Plan.

8.
Home buying: Relaxing the rules under which people can pull money out of a registered retirement savings plan for a house down payment. The Home Buyers’ Plan currently focuses on first-time buyers; people would additionally be able to use it multiple times when moving for work, after the death of a spouse, after a marital split or to take in an elderly relative.

  1. Student loans: Grads would not have to repay student loans until they earned at least $25,000 a year, with interest paid by the federal government during that period; also, the maximum Canada Student Grant for low-income students would rise to $3,000 annually for people studying full time.

10 Ways to Save Money This Holiday Season…

The Holiday season is right around the corner. Here are a few pointers on how to keep your finances in order while preparing for all the festivities!

LEST WE FORGET
In support of all of those who fought for our freedom and those who continue to help keep Canada a great place to call home, be sure to wear a poppy leading up to Remembrance Day! And please join in on the two minutes of silence on November 11th at 11am

 

Welcome to our Monthly Newsletter!

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CHIP Reverse Mortgage: Resources to Help You Make the Right Decision

The Truth About Reverse Mortgages

Reverse Mortgages have been available in Canada for 25 years, but there are still many myths and misconceptions about them – some understandable and some are not accurate.

In this article, let’s separate fact from fiction. If you are considering a Reverse Mortgage, it is important you can make an informed and intelligent decision.

What exactly is a Reverse Mortgage?

A Reverse Mortgage is a loan available only to homeowners 55 or older. The amount you can borrow is based upon several factors including your age and the value of your home.

What’s the difference between a Reverse Mortgage and a traditional loan?

There are two main differences. First, unlike a traditional loan, you can get a Reverse Mortgage regardless of your income or credit rating.

Second, you are not required to make any payments on a Reverse Mortgage until you choose to move or sell your home. (However, you can make payments on the loan if you choose to do so.*)

*Prepayment charges may apply.

When you do decide to move or sell, the loan is repaid from the proceeds of the sale of the home. After the loan is repaid, all remaining money belongs to you and your estate.

How much equity (money) will be left in my home after I repay the loan?

On average, homeowners have well over 50% of the value of their home left to enjoy after repaying the loan. This money belongs to you. The exact amount will depend upon several factors, including: the amount of your loan, the value of your home, and the amount of time passed since you took out the loan.

Can I be forced to sell my home and repay the loan?

No. You always maintain complete ownership and control of your home at all times. You can never be forced to sell or move to repay the loan. All you have to do is keep your property in good maintenance, pay your property taxes and property insurance..

Click here to read the rest of the CHIP Reverse Mortgage article

Waiting for fixed mortgage rates to drop? You might be disappointed

If you’re a mortgage shopper stressing about whether to lock into a five-year fixed rate, you’re probably wondering if rates can drop further.

No one wants to leave interest savings on the table and it’s way more fun to say you timed your mortgage like a champ.

But those of us waiting for fixed rates to drop much more might be disappointed. Here’s why.

The money for fixed mortgages comes largely from fixed-income investors. That’s the reason lower government bond yields typically lead to a drop in lenders’ funding costs. This year, however, that hasn’t happened to the degree we’d expect.

At the start of the year, deep-discounted five-year fixed rates were roughly 2.89 per cent on average. Today they’re about 0.40 percentage points lower at 2.49 per cent. Meanwhile, the most popular lead indicator of fixed mortgage pricing, the five-year government bond yield, is down an even greater 0.60 percentage points.

Click here to read the rest of the Globe and Mail article

Fall Cleaning Chore Checklist

It’s Autumn.

Pumpkins glow in golden fields. Shorter days, crisp mornings signal winter’s approach.

Can the holidays be far behind?

Use Autumn’s brisk and breezy days to conquer deep-cleaning chores for a clean and comfortable winter home, and wrap up summer’s outdoor areas.

Our Fall Cleaning Chore Checklist will help you prepare home and hearth for the coming of winter.

Click here for the Fall Cleaning Checklist from Organized Home

Now, more than ever we want to give back to the community!

Click here to see how you can help!


Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community Great!

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Welcome to our Monthly Newsletter!

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Positive News for First-Time Homebuyers…

We welcome the Conservative Government’s announcement today proposing to increase the RRSP Home Buyers’ Plan (HBP) withdrawal up to $35,000 from the current $25,000 for first-time homebuyers. If implemented, a couple buying a home together would have access to an extra $20,000 of their RRSPs to help with their down payment and other expenses relating to their home purchase.

Borrowers are considered first-timers if, in the past four years, they have not lived in a home that they or their current spouse/common-law partner owned. (See Conditions.)

As you may be aware, CAAMP regularly visits both federal and provincial government officials. This announcement is in line with the kind of recommendations that CAAMP makes during meetings with officials in the Ministry of Finance Office and the Prime Minister’s Office.

The government respects our industry-leading research and sees your association as a positive resource. Our latest research report released in June – A Profile of Home Buying in Canada prepared by CAAMP Chief Economist Will Dunning – shows withdrawals from RRSPs (including via the HBP) accounted for 10% of down payment funds for first-time buyers. If put into action, this proposed HBP withdrawal increase would go a long way in helping first-time homebuyers across Canada.

Today’s announcement follows Stephen Harper’s first big-ticket promise of his campaign: another tax break for home renovations made earlier this month.

Taxpayers would be able to claim up to 15% of the cost of permanent “substantial” renovations to homes, condos and cottages. The tax credit would apply to renovation costs between $1,000 and $5,000, allowing a taxpayer to get back up to $600 per year.

We look forward to more positive housing-related announcements from other campaigns leading up to the fall election.

This article is from Mortgage Centre Canada Head Office

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 Mike Holmes: You may call it “that thingy with the whatsit,” but for safety’s sake, know what each tool is for and how it works

I’m all about hiring the right pros when you need them, but I also understand that people like to feel self-sufficient and do things for themselves. I’m a big believer in doing things right, but that also means doing them safe. For that, you need to be educated and learn the proper way to work with tools.

No. 1 is your safety. Make sure you have the proper gear for the work you’ll be doing and the tools you’ll be using. That usually includes a pair of safety glasses, a respirator, proper gloves, footwear and maybe ear protection (if there’s going to be loud machinery or tools being used).

Even if other people will be doing the work — let’s say you hired landscapers or someone to build you a deck or a fence — but you will be in the area where they will be working, maybe checking out the work yourself, you should be wearing all the proper gear as if you’re doing the work yourself. It’s meant to protect you on any active job site.

What you wear is also very important. By that, I mean wearing workpants made of a tough material, like canvas, or even jeans if it’s just a simple DIY project like drywall repairs or painting. But absolutely no shorts! Even if it’s just yard work, you want to protect your legs.

Click here to read the rest of the National Post article

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Now, more than ever we want to give back to the community!

Click here to see how you can help!


Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community Great!

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Canada’s big banks cut prime rate after BoC move

Canada’s big banks followed the Bank of Canada’s interest rate cut, lowering their prime lending rates in a series of moves that nonetheless reinforce the reluctance of lenders to follow the central bank in lockstep.

Toronto-Dominion Bank initially decreased its prime rate – the benchmark for creditworthy borrowers – to 2.75 per cent, down 0.10 percentage points. Royal Bank of Canada, Bank of Montreal, Bank of Nova Scotia and Canadian Imperial Bank of Commerce responded on Wednesday evening, reducing theirs by 0.15 points to 2.70 per cent from 2.85 per cent. That’s a shallower reduction than the central bank’s 0.25-point cut.  TD then matched the lower prime rates with an additional cut.

Click here to read the rest of the Globe and Mail article

 

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Buy wine abroad? Here’s what you need to know to bring it home safely

For all the wine lovers out there who like to buy wines abroad, click here to watch a short video from the Globe and Mail about how to bring back wine safely when travelling abroad.

 

Renewing your Mortgage

 It is crucial that we work together prior to your renewal date to ensure that you continue to benefit from the best mortgage terms and interest rates available on the market.  When it comes time to renew or refinance, we will make sure you get the best deal again!

Moving forward with your mortgage product, we continue to be your best resource for information and guidance. We can advise you when it comes to the terms of the mortgage and approximate payout amounts. Please call or email us with any account related questions and we will work together to get the answers you need.

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Now, more than ever we want to give back to the community!
Click here to see how you can help!

Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community Great!

 

 

 

 

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Posted Rates & Penalty Pain

When choosing between mortgages, knowing how different lenders calculate penalties can be essential. The market and your needs can easily shift during the term of your mortgage and the last thing you want is a painful penalty in order to get out early.

Penalty formulas differ radically, depending on the lender. A major bank, for example, will have a considerably higher penalty than a broker-only wholesale lender. Advice on how to avoid painful penalties is a key benefit of working with a mortgage broker.

You need to ask one important question right off the bat: What rates does the lender use to calculate its penalty? The actual discounted rates that people pay, or some artificially high posted rate? Hopefully the former.

Below is an example of how two lenders calculate the same “interest rate differential” penalty in different ways. Ask yourself, which one would save you the most money?

Click here to read the rest of the canadianmortgagetrends.com article

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It’s taxes versus a mortgage for the self-employed

Eighty of mortgage broker Dustan Woodhouse’s clients who were approved for a mortgage in 2011 wouldn’t have qualified for the same mortgage today.

In the summer of 2012, Canada’s financial regulator introduced Guideline B-20 as a way of tightening up the banks’ approval processes.

Part of B-20 requires banks to examine incomes more closely, but where does that leave self-employed people, who have had more trouble getting mortgages since that rule was brought in?

“It sort of came in under the radar a little bit and caught a lot of [self-employed] people off guard when they were probably not used to having any real issues with arranging financing in the past,” says Gerry Orr, president and owner of Alberta Mortgages in Calgary.

The main problem for self-employed workers is that they typically lower their taxable income through business expenses and other deductions, so what they declare is often an inaccurate reflection of their true incomes. In the past, they were able to simply declare their incomes and provide proof of self-employment, along with other documentation.

Click here to read the rest of the Globe and Mail article

Renewing your Mortgage

 It is crucial that we work together prior to your renewal date to ensure that you continue to benefit from the best mortgage terms and interest rates available on the market.  When it comes time to renew or refinance, we will make sure you get the best deal again!

Moving forward with your mortgage product, we continue to be your best resource for information and guidance. We can advise you when it comes to the terms of the mortgage and approximate payout amounts. Please call or email us with any account related questions and we will work together to get the answers you need.

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Now, more than ever we want to give back to the community!

Click here to see how you can help! http://www.thecauseway.biz/

Please tell all of your friends and family about “The Cause Way” and help us support the groups and people that make our community Great!




 

 

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Office: (403) 380-2211 Toll Free: 1-800-513-4449
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Welcome to the April issue of the Mortgage Financing Journal, which is designed to help keep you in the know regarding Real Estate and Mortgage related matters!

This month’s edition offers tips to help prepare for porting your mortgage; resources for seniors; and some timely lawn care hints now that Spring has Sprung!

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Moving House Means Moving Mortgage

Do you have a mortgage on your existing home and you’re thinking of moving? There are some things you first need to consider.

The importance of accurate and detailed answers around questions of the portability of your existing mortgage is vital prior to taking the first step to listing your property in order to move to a new one. All too often a cursory phone call is made directly to the lender to inquire ‘is our mortgage portable’ and often the answer to that question is delivered in a simple ‘yes’. However there is more to this answer, and a detailed conversation with your Mortgage Centre professional is vital.

Although nearly all mortgages are portable, the key point often missing from the one word answer is that a borrower MUST re-qualify for that mortgage. It is treated like a brand new mortgage application and underwritten according to current lending guidelines. Guidelines which may have changed significantly since the original mortgage was approved.

A renewal is a simple process with limited paperwork required while porting a mortgage to a new property is essentially starting from square one. This said a conversation with your Mortgage Centre professional at renewal time is also prudent.

There are also variations around lender process which require greater clarity, few lenders will allow the porting of a variable rate discount, yet the prepayment penalty itself can still be recovered up to 12 months later in some instances. The key is that a mortgage of equal size or greater and an equal (net) rate or higher is registered. Should a mortgage of a lower size be taken then the penalty is pro-rated. There are many ways to avoid a penalty with the right assistance navigating policies.

Again this is where your Mortgage Centre professional can play an important role. Clarifying the widely varying polices around penalty recovery. Thinking of selling your home? Your first call should be to your Mortgage Centre professional to confirm portability policies and potential strategies to minimize risk.

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Maintaining Seniors’ Independence Through Home Adaptations

The overwhelming majority of seniors wish to continue to live in their own homes for as long as possible. However, many homes are not well designed to meet our changing needs as we age.

Canada Mortgage and Housing Corporation (CMHC) provides resources and publications to both assist in identifying as well as addressing the difficulties that seniors can experience with adapting their home for continued residence.

Each of the sections of the CMHC Guide deals with an activity in the home. In using each section of the Guide, first decide whether you are having difficulty with the described activity. If you are, examine the types of adaptations described in the section and decide whether any could help you.

Although this Guide is designed to assist you in assessing your own needs, you may wish to ask a family member or friend to help you answer the questions. Sometimes an additional pair of eyes will spot something you have overlooked.


Getting the work done

You, a family member or a friend may possess the knowledge and special skills required to successfully carry out some of the adaptations you have identified.

However, if you are going to get a contractor to carry out the work, it is advisable to obtain more than one estimate. This Guide, complete with your notes and descriptions, can be used as the basis for obtaining tenders and negotiating with the contractors.

You may have to be selective in choosing adaptations in order to stay within your budget, so be sure to concentrate on the adaptations that will be of most benefit to you. Every house and every person’s requirements are different, so be sure you agree only to adaptations that you need and want.

 

Homeowner Tips

Lawns are great for picnics, slip and slides, cloud watching and having your teenager earn an allowance to keep it looking great!

Spring Lawn Care:                                                                                                                    

As the ground thaws across Canada, except for those on the West Coast who have forgotten what a snowflake looks like at all, the time for gardening and lawn care is upon us.

Aeration is often referred to as the best fertilizer for your lawn – and it’s fairly simple to do. The process involves the removal of small cores – or plugs of soil – which are then deposited on the surface. Within a month or so, these soil plugs will work their way back into the grass thus ensuring a lush thick lawn requiring a weekly cut. Perhaps also a reason to avoid aeration for some! However for those pursuing Greenskeeper perfection, aeration should be followed by sanding and overseeding. Between the bulky, heavy aeration machine and load of sand required, this is often a task best coordinated with a few neighbours, ideally ones with fiscally motivated teenagers. The aeration and overseeding should lead to a reduction in weeds throughout the summer as well.

Allow your local garden centre expert to suggest a proper fertilizer and schedule to suit your lawns needs.

Some gardeners prefer no lawn at all, as do some non-gardeners. Yet as much as I may prefer a yard that is palatial decking from fence to fence the reality for children is that a lawn is a canvas on which to paint many a summer memory. From picnics, to slip and slides, from cloud watching to earning an allowance lugging a mower around. Lawns absorb water and release clean oxygen all while being aesthetically pleasing with a modest amount of effort.

May yours be stunning and low maintenance.

 

 

Welcome to the March issue of our monthly newsletter!

Hi,

Welcome to the March issue of the Mortgage Financing Journal, which is designed to help keep you in the know

regarding Real Estate and Mortgage related matters!

This month’s edition looks into mortgage payment frequency and a very important related keyword; ‘accelerated’.  We

then offer some thoughts on whether or not now is the right day to purchase a property.

Please feel free to ask questions or offer feedback on anything outlined below via phone or email.

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Over the past number of years banks have come up with a rather confusing set of payment frequency options that have left

some mortgage clients a bit disappointed 5 years down the road.

Rather than the Amortization crushing ‘Accelerated bi-weekly’ plan which a quality Mortgage Broker will discuss with

you, clients left to their own devices run the risk of opting for simply ‘bi-weekly’ payments.  Here is the math;

Let’s use a $100,000 mortgage amount (to make working out your own numbers simpler) with a 25 year amortization, a

2.74% interest rate and a 5 year term.

Monthly Payments: $460.01

Ending Balance 60 months later: $85,043.18

Now let’s calculate bi-weekly payments and the balance remaining at the end of the 5 year term.

Bi-Weekly Payments: $212.18

Ending balance 60 months later: $85,043.60

The balance is 42 cents higher.  This is because you did not effectively pay anything extra over the 60 months to the

lender.  The sum of the annual payments is identical.  Now let’s insert the word ‘ACCELERATED’ (bi-weekly) into the

equation.

Accelerated bi-weekly Payment: $230.00

Ending balance 60 months later: $82,563.13

Ah-ha, now you have a $2,480.47 lower balance, and you have paid $163.87 less interest over the 5 years.  Excellent!

How did this happen?  When one opts for ‘accelerated’ in the above scenario, the payment increases by $17.82 per

payment, or $463.32 per year.  For a total of $2,316.60 in additional funds going straight to the mortgage balance.

The big picture is improved as well, as you have effectively lowered your amortization from 25 years to 22 years and 5

months.

Shaving 2.5 years off a 25 year mortgage might not seem huge, but in 22.5 years it surely will make you happy.  Imagine

having $460.00 more per month (per $100,000 of mortgage balance) to play with for 2.5 years.

If you started with a $300,000 mortgage, then we are talking about $1380.02 per month X 30 which is a total of

$41,400.60.  All from one word ‘accelerated’.

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This question arises on a near daily basis within our social circles… Answer:  Today is the right day assuming one has

found the specific property that works for them on all levels.

If the conversation is about a property which one plans to own for at least the next few years, then yes, the right time to

buy is today.

Over a 7-10 year horizon the day-to-day, even the month-to-month gyrations of the market will tend to resemble those of a

small yo-yo on a large escalator.  Yes there are some ups and downs but the lows often do not drop below the second last

high. This is true of nearly any major urban 25 year chart of Real Estate Values.

There are some key considerations that will dictate not only the continued value, but perhaps more importantly your own

ability to stay put for that magic 7-10 year timeframe:

 Home location

 Layout

 Age

 Size

 Recreational amenities

 Schools

 Distance from workplace

 Potential basement suite revenue

The list goes on…

Getting all of these variables aligned is something that takes dedication on the part of the both the buyer and Realtor.  The

hunt itself can easily consume a few weeks or more, and for some may result in dozens of viewings.  This is more than

enough to juggle without also trying to ‘time the market’ on that perfect home.

Speaking of timing; consider allowing for a small overlap during which you have access to both the current residence as

well as the new one.  Being able to install new flooring throughout, complete interior painting, or upgrade kitchens and

bathrooms, without having to live in the middle of the disruption is well worth an extra month of rent or the marginal costs

of bridge financing.  The costs involved are surprisingly lower than most clients expect.

Keep in mind during your search that the MLS #’s are an imperfect indicator of what is happening today in the market, as

in literally ‘today’. MLS data reflects purchase contracts that were negotiated 30, 60, 90 or even 120 days prior to the

completion date which was itself in the previous months report.  In other words, by the time the MLS data indicates a

trend one way or another, said trend has in fact been in motion for as long as 6 months and could be either reversing or

ramping up further.

Where then to get the most accurate data? Talk to frontline folks, Realtors, Brokers, Appraisers, etc. for a better handle on

up-to-the-minute trends.  Ask an Industry Expert.

Short term fluctuations in values and/or interest rates are themselves not the key factors in many peoples decision to buy.

Instead it is finding that perfect combination of all the factors that create a home within a community and the realisation

that homeowners win in the long run by owning, not by sitting on the sidelines.

It is all about finding a place you can call home for the duration. To be able to plant roots and become a part of a

community.  Home ownership will undeniably continue to be a part of living the Canadian dream.

Perhaps the (short term) timing will feel imperfect, as it did for presale buyers in 2007, whose completion dates were set

for Spring 2009. However, a few years later most will be glad that they bought when they did.  In fact many were smiling

again as soon as the Spring of 2010.

Home ownership remains the one true forced savings plan. It is one of the best investments we make socially as it provides

an individual and/or a family with a certain sense of security, stability and community.

Office: (403) 380-2211 Toll Free: 1-800-513-4449

Welcome to the February issue of our monthly newsletter!
This month’s edition looks into Property Assessments as a measure of real estate value.  It also goes deeper into the impacts of the Bank of Canada lowering lending rates and how that affects mortgages. Please feel free to ask questions or offer feedback on anything outlined below via phone or email.
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When homeowners receive provincial Property Assessment notices, some will smile and have a bit more spring in their step, feeling the assessed value is accurate or perhaps even overly positive. Others will wilt and lament a modest gain or even a decrease in the assessed value over the previous year or period. Reactions will of course vary factoring in the potential increase in property taxes that tends to come along with stronger assessments.  The reality, setting aside taxation concerns, is that neither parties’ emotions should be tied to the ‘value’ printed on these notices. 

A provincial property assessment is an approximate value based on the (broadly) estimated market value as of the previous years. There is a lag time between the estimation of valuation and delivery of the envelope. It also fails to involve a formal site visit or viewing of the inside of the home to consider either significant upgrades or significant deterioration.

To put this in perspective, few lenders will work with a detailed official appraisal report that is even 90 days old.  Most prefer a report completed with 30 days, as markets can move significantly month over month.
For these reasons, among others, a provincial property assessment should not be relied upon as a totally concrete indicator of value for the purposes of either purchase, sale, or financing.

Always enlist a licensed professional, or perhaps even two or three, in order to get a timely and detailed appraisal of current market value. This will provide a much more accurate reflection of current market values reflecting recent comparable sales, value for zoning, renovations and/or other unique features to the property.  An appraiser is an educated, licensed, and heavily regulated third party offering an unbiased valuation of the property in question.

Think of your provincial property assessment as something akin to a weather forecast spanning far larger and more diverse areas than the unique ecosystem that is your neighbourhood, street, and specific property. The forecast may call for rain in your city, yet you might have a ray of sunshine radiating upon your street specifically.

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On the heels of headlines forecasting ‘inevitable interest rate hikes’ came (from left field for many journalists, less so for many Mortgage Brokers) the announcement of a 0.25% rate reduction to the Bank of Canada’s overnight lending rate.

The majority of Mortgage Brokers found themselves spending the first two work weeks of 2015 calming clients in the face of multiple headlines forecasting interest rate ‘shocks’ ahead. In turn, the past two weeks were spent explaining to variable-rate clients the subtle, yet important difference between the bank of Canada’s Prime rate and their mortgage lenders’ ‘Prime’ rate.

Lenders base variable-rate mortgages on what is referred to as their own internal Prime rate. Although historically lenders have moved in lockstep with the Bank of Canada decisions, there was some initial reticence to lower effective interest rates on current variable-rate mortgages and after nearly a week without movement Lenders reduced their internal Prime rate from 3.00 to 2.85% sharing some of the Bank of Canada’s reduction with variable rate mortgage and line of credit holders, but not all of the rate reduction.

One important point is that the Bank of Canada’s Prime rate is specifically NOT used to qualify clients for mortgages. In other words, Canadians do not currently qualify for any more mortgage debt today than they did the day before the rate reduction announcement. Accordingly this reduction in interest rates does not directly strengthen purchasing power for home buyers, and thus should do little to add more fuel to real estate values.

It is further worth noting that, historically, as lenders reduce their own Prime lending rate on variable-rate products, the discounts offered on these products – mortgages, lines of credit, etc -.tend to be adjusted upward, negating any potential gains for new mortgage applicants. Existing closed variable-rate discounts will of course continue to be honoured until the end of the client’s mortgage term.

In short, although this rate reduction may bode well for clients currently in a variable-rate mortgage, it may not be of significant net benefit for clients applying for a variable-rate product in the coming weeks. Although today we have both deep discounts on variable rate products, and the new lower 2.85% Lender Prime rate. New applicants may have their cake and eat it too.

Fixed rates, although largely dictated by the bond market, have been edging downward since Jan 5. Despite this material and documented decline, there had not been a major headline noting this. Rather headlines were largely promoting the opposite of what was occurring in reality. The day that the Bank of Canada announced the cut of 0.25%, the bond market saw a (then) record low of 0.83% and has since dipped below 0.60%.

This has created significant increases in lenders’ fixed-rate profit margins, and arguably calls for further rate reductions to fixed-rate products, in particular the five-year fixed-rate mortgage. However, as with the cut to Prime, lenders have thus far been slow to respond. Offering 0.05% and 0.010% reductions and reaping the increased profits. Lenders remain unlikely to make any significant moves until one breaks ranks. With strong property values coupled with strong sales activity in most major markets, there seems little incentive – or fundamental desire – on the part of lenders to reduce rates further.

What is evident at this time is that variable-rate clients will continue to be the big winners into the foreseeable future, and those clients who prefer a fixed-rate product will also continue to benefit from historic lows as well. It should be a very busy Spring market!

Recent Cancun Trip / Awards Ceremony
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Welcome to the start of another year. This month’s edition delves into ten secrets of sophisticated real estate investors. It also highlights some important tips to help us protect our credit scores. Please feel free to ask questions or offer feedback regarding anything outlined below via phone or email.

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There are many things that can affect the market value of a property, ranging from interest rates to home improvements to the mood of the seller.  Below are some of the key dynamics that tend to have the largest influence on home values that every homeowner or aspiring homeowner should be aware of.  These factors are often gauged by sophisticated Real Estate investors before they decide to invest in an area:
1. Increase in Disposable Incomes
This is one of the most important indicators. If a town’s average disposable income is increasing faster than the national average, real estate prices are poised to follow suit.  Key indicators: a) increased average income; b) decreasing income tax rates; c) increasing retail sales.  Be wary of towns where demand is driving values upward while the average income is remaining flat.

2. Job Growth & Migration
It pays to read the news regularly in the town you would like to invest in or have invested in.  Be on the lookout for announcements of new jobs, major expansions, or new employers. Ideally you can purchase in areas where the population is growing faster than the provincial average and where the reputation of the town, city or region is strong.

3. Political Climate
Business friendly politicians generally equal real estate friendly investment areas.  Look for regions where development is wanted, not shunned.  Look for areas with forward-looking economic development offices where they sell the area to potential employers. Progressive towns attract business while other towns lose it.

4. Infrastructure Expansion

Here’s another reason why reading local news in areas that you plan to invest in can pay off for you big time.  Look for planes, trains, highways, sewers, land annexation or expansion plans.  Don’t buy until the construction begins or until plans have been completely firmed up, it can be dangerous to buy based on rumors alone.  Trains and rapid transport are huge opportunities (towers that spring up at subway stops as an example). To enjoy a nice price increase relative to other areas of the town, city or region not affected by the infrastructure enhancement, try to buy within 800 meters of the station, or exit/entrance etc.

5. Areas of Renewal
If chosen correctly this consistently provides the biggest bang for investment dollars.  This is best defined as areas that are moving up from one economic class to the next, often described as “tough, yet funky”.  In these areas, you’ll witness a mix of run down to well-kept, recently fixed up properties.  Often you’ll see these areas mentioned in the news, every city and most towns have areas like this.  The local perception is the hardest to change, so often locals miss the opportunity.  

  1. Mortgage Interest Rates
    Low interest rates allow a greater proportion of renters to become homeowners, which in turn can lead to an increase in home sales and therefore push prices higher.  That said they don’t significantly increase mortgage costs (on a $100K mortgage a quarter % increase in rates only increases the payments by about $14). With interest rates historically low for the past several years, this is less of a factor now than it would be when rates first dropped.7. Maximizing Value and Zoning Opportunities
    Sophisticated real estate investors look first at a properties physical attributes, and then they examine how they may be able to change the property to optimize profit way beyond just renovations. As an example, an old hotel that is converted into loft apartments (advanced), or taking a single family home and converting it to a duplex (less advanced but still can be tricky).  You need to know zoning bylaws and tenant regulations to make the transition successful. A small percentage of properties will have this potential, but make sure you have the required finances and expertise before taking this on, or find a partner.8. Buy Wholesale; Sell Retail
    You can buy properties at wholesale any day of the week in any town across the country, there are many investors across Canada who make their entire livings this way. This can include buying rundown properties and fixing them up, developing raw land or buying properties that are going to foreclosure.  In Canada, accessing foreclosure properties is tougher than in other countries such as the US.  The best opportunity for this in Canada is the pre-foreclosure market, some investors will advertise targeting distressed homeowners and then provide them with a much needed opportunity to sell.9. Stand Out

Quality marketing is a real estate investor’s best kept secret.  You must be proficient to get above market rents and values for your properties. An example of this would be how two incredibly similar houses in the same neighbourhood can easily sell or rent for a 5-10% variance from each other. Matching your message to your prospective target in a compelling way is critical.

10. Renovations and Sweat Equity
Areas in transition are great sources for homes that need improvements.  Look for well-built but neglected homes.  Keep the work simple and in line with what a renter or owner is looking for. Remember, smaller aesthetic investments such as in paint, flooring or carpeting can provide the biggest bang for your buck.  Landscaping and exterior work also typically provide a solid return.

As always, if you have any questions about mortgage portability or your mortgage in general, we’re here to help!

 

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At this time of year, especially if we were extra generous with our gift giving, it’s important to review the top factors that can lower our credit scores.  Please also see “Tips to Improve Your Credit Rating” on the left in this issue of the Mortgage Financing Journal.

  1. There are too many consumer finance company accounts on your credit report.  Having too much available credit can hurt your score. If you have several consumer accounts try to consolidate those balances and close the accounts.
  2. Your account balances are too high. As a rule of thumb keep your credit card balances below 35% of the available limit. High balances ongoing will negatively affect your credit score.
  3. There is not enough recent revolving account information on your credit report. Using your credit cards regularly is an important part of building healthy credit.

There have been multiple lending institutions pulling credit reports on you.  This is part of the advantage of using a Mortgage Broker; we pull one credit report and then go to several lenders vs. having several lenders each pulling your credit bureau.

For more information, visit www.cmhc.ca or follow CMHC on Twitter, YouTube and Flickr.