Ask any mortgage broker and they can tell you that there are a handful of misconceptions that the public has about working with a mortgage broker. From questioning their credentials (we all are regulated and licensed with in our own province, and are constantly re-educating ourselves) to assuming that the broker does not have access to the same rate as the banks (we do in fact—plus access to even more lending options) mortgage brokers have heard it all!

With the recent changes to the B-20 guidelines taking full effect as of January 1, 2018 the mortgage landscape is changing and we firmly believe in keeping our clients educated and informed. With these changes, there have been a number of misconceptions that have come to light regarding mortgage professionals and their “limitations” and we felt it was time to address them:

Myth 1: Independent Broker’s don’t have access to the rates the banks do.

Fact: Not true. Brokers have access to MORE rates and lenders than the bank. The bank brokers only have access to their rates-no other ones. A mortgage professional has access to:

• Tier 1 banks in Canada
• Credit Unions
• Monoline Lenders
• Alternative Lenders
• Private Lenders

This extensive network of lender options allows brokers to ensure that you are not only getting the sharpest rate, but that the mortgage product is also aligned with the client’s needs.

Myth 2: The consumer has to negotiate a rate with a lender directly.

Fact: Not true at all! Your mortgage professional will shop the market to find the best overall cost of borrowing for the client. Broker’s will look at all angles of the product to ensure that the client is getting one that will suit their unique and specific needs. Not once will the client be expected to shop their mortgage around or to speak to the lender. This is different from the bank where you are limited to only their rates and are left to negotiate with the bank’s broker—who is paid by the bank! We don’t know about you, but we would much rather have a broker negotiate on our behalf. Plus, they are FREE to use (see myth #6)

Myth 3: A Broker’s goal is to move the mortgage on each renewal.

Fact: A Mortgage Broker’s goal is to present multiple options to consumers so they can secure the optimal product for their specific and unique needs. This entails the broker looking at more than just the rate. A broker will look at:
• Prepayment options
• Costs of borrowing
• Portability
• Penalty to break
• Mortgage charges

And more. If the Broker determines that the current lender is the most ideal for their client at the time of renewal, then they will advise them to remain with that lender. The end goal of renewal is simple: provide clients the best ongoing, current advice at the time of origination and at the time of renewal

Myth 4: The broker receives a trailer fee if the client remains with the same lender at renewal.

Fact: This is on a case-to-case basis. At times, there is a small fee given to the broker if a client opts to renew with their current lender. This allows for accountability between the lender, broker, and customer in most cases. However, this is not always the case and the details of each renewal will vary.

Myth 5: If a Broker moves a mortgage to a new lender upon time of renewal then the full mortgage commission is received by the broker, allowing the broker to obtain “passive income” by constantly switching clients over.

Fact: Let’s clarify: If a client chooses to move their mortgage at renewal after a broker presents them with the best options, then it is in fact a new deal. By being a new deal, this means that the broker has all the work associated with any new file at that time. It is the equivalent of a brand-new mortgage and the broker will have to do the correct steps and work associated with it.

A second point of clarification-although the broker will earn income on this switch, the income (in most cases) is paid by the financial institution receiving the mortgage, NOT the client.

Myth 6: It costs a client more to renew with a mortgage broker.

Fact: Completely false. Clients SAVE MONEY when they work with a mortgage broker at . A broker has access to a variety of lenders and can offer discounts that the bank can’t. Additionally, most mortgage brokers offer continuous advice and information to their clients. Working with a broker is not a “one and done” deal as it is a broker’s goal to keep their clients informed, educated, and well-versed as to what is happening in the industry and how it will affect them. When you work with a broker instead of the bank, you not only get the best mortgage for you, but you also have access to a wealth of industry knowledge continuously.

Mortgage Brokers are a dedicated group of individuals who work directly for the client, not the lenders or the bank. Brokers are problem-solvers, advisors and honourable individuals. We work hard to give our clients the best that we can in an industry that constantly is evolving and changing.

We encourage you to reach out to your local Dominion Lending Centres mortgage professional if you have any misconceptions or questions about working with a broker-we are happy to answer them and help you with your mortgage, your renewal, and everything and anything in between.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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1. How the penalties are calculated if I break my mortgage early? Specifically, ask what rate they use to calculate the “interest rate differential”. Typically, if the lender has “posted rates” they use these to calculate the penalty. If this is the case, the penalty can be 3, 4 or even 5 times higher than a mortgage lender that does not have posted rates and uses them in their early payout penalty calculation. This one question can save you thousands of dollars!

2. Is this a “collateral” mortgage? Some lenders have recently started putting all of their mortgages into what is called a “collateral” charge. In the right situation, given significant equity in the home, this product can be very useful and advantageous. The disadvantage to this product however, is that you cannot “switch” it to another lender at maturity. You have to actually discharge this type of mortgage and re-register a new one with a new lender which will cost on average $1000 for legal fees and appraisal costs. Beware of lenders who do this, especially if your mortgage is high ratio because it is only useful if you have more than 20% equity.

3. Can I “blend and extend” my mortgage if I buy another house? Most variable rate mortgages cannot be “blended” however, typically the penalty to break a variable is 3 months interest. Some lenders have changed their policies (very quietly) – instead of allowing you to add new money to a mortgage in the event of a new purchase, they require you to pay the full penalty. Some clients have been caught off guard by sneaky lenders who don’t tell them this until only a few days before close, at which time it’s too late to switch lenders.

4. What happens to my life insurance if I switch lenders at the end of my term? This is a very commonly overlooked detail by those who take the insurance offered by their bank or lender. The challenge is that if you want to “switch” your mortgage to another lender at the end of your term, you have to re-apply for insurance. The downside to this is that you’ll be five years older, and if you have developed any health issues, you may not qualify for the insurance at all. Getting insurance that mortgage brokers offer stays in place for the whole time you have your mortgage, no matter who your mortgage lender is.

5. What happens at the end of the term (typically five years)? Will they offer you the best rate they offer their new clients, or will you have to negotiate for best rates at that time. Most banks know that clients likely won’t make the effort to negotiate the best rates. Working with an independent specialist will provide you with the most competitive rates, not only when you buy your home, but when it comes up for renewal. A qualified professional will make sure you have the best options available each time your mortgage comes due.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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I am often asked by clients about the real value of title insurance, why they need to have and pay for it.  Whether you are a home buyer or a home owner simply refinancing the mortgage on your home, you will need title insurance.  Once I explain the reason and need for title insurance, the majority of home owners accept the cost and see the real value of title insurance.

Title insurance includes a lender portion policy and the homeowner has the option to add a Homeowner Policy portion.

Lenders request the insurance to protect against title fraud and the high costs associated with this growing crime. However, there are more benefits to this insurance for the homeowner.

1. The policy transfers risks related to title of the property from the home buyer to title insurance provider. So if any delays or issues occur on title during the purchase, the insurance provider will resolve it and the associated costs.

2. The Homeowner Policy also covers losses associated with survey issues and title defects that existed prior to the home purchase as well as title fraud occurring after the policy is issued. Coverage continues after the purchase for as long as the owners own the home. Title insurance covers losses resulting from many risks not directly related to title, such as: structures or renovations previously completed without required permits, unknown work orders, encroachments, liens, zoning and by-law violations.

3. The policy protects the homeowner against any future title fraud on the property. For properties that are clear title with no mortgage, there is a risk that a criminal can assign a mortgage against that property without the owner’s knowledge. They take the money and run leaving the homeowner with a mortgage and payments.

Who is at risk?

The easiest target is the homeowner with no existing mortgage. However, even a property owner with a mortgage can become a victim. In both cases, mortgage funds are usually sent to a third party and are often unrecoverable. For this reason, lenders want homeowners to acquire title insurance to transfer the cost to fight the case and cover the costs to the title insurance provider.

What can the homeowner expect if they are a victim of title fraud?

The immediate issue for homeowners in a real estate title fraud situation is the homeowner is responsible to prove the crime occurred. During that time they could be responsible for a mortgage and the payments. If unpaid, this can result in foreclosure by the lender and a record of the late payments on the owner’s credit report.

If you become a victim in a real estate title fraud, it can take considerable time and money such as:

* Costs for legal fees to show proof you are the victim
* Lost opportunities to sell or buy another property
* Mental distress
* Possibility of losing your home to foreclosure by the lender
Title insurance covers the legal expenses and many other costs related to restoring title in cases of real estate title fraud.

For homeowners who did not obtain title insurance when they bought their home, the protection title insurance can be purchased any time.

If you are buying a home, your Dominion Lending Centres mortgage professional and your lawyer will discuss title insurance with you. If you are a current homeowner who wishes to obtain title insurance, contact your lawyer or a title insurance company. I have provided some links below for your reference. Fees range depending on the value of the property.

The first link below outlines costs.
http://www.bcrealestatelawyers.com/real-estate-fraud-and-title-insurance/
www.fct.ca

Have a great day!

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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Are you an adult with an aging parent(s) and are you concerned about your parents’ ability to remain financially independent? Today, Canadian adults have many responsibilities, including the concern for their children’s well-being, as well as their parents’ quality of life and their debt. As life expectancy rises for the senior demographic, there is a growing trend of retirees not saving enough for retirement. Many Canadians overestimate how long their money will last, in part due to their longer-than-expected lifespan.

How can you help your parents maintain their financial independence?

Among the many concerns we have for our aging parents, the biggest concerns include their ability to retain their standard of living. Many senior Canadians prefer to stay in the comfort of their own homes to age-in-place, but we have noticed that their finances are not as stable as we anticipated and they may be struggling with:

• Health/Medical costs & expenses – Your parents’ health care costs are piling up.
• Monthly bills – You notice that your parent(s) are struggling to pay monthly utility and phone bills.
• Renovations and retrofits – Your parents’ home may require repairs. Their home may need retrofits in order for them to maintain their lifestyle, for example, they may need to install a stair lift because of knee problems.
• Revenue Canada debt – Your parent(s) struggle to pay their taxes and now have accumulated debt.
• Property taxes (in arrears) – Your parent(s) have forgotten one too many payments.

If your parent(s) are stressed over their finances, you can help them maintain their independence by introducing them to financing options to help them regain control of their retirement. The CHIP Reverse Mortgage from HomEquity Bank is a great option for older Canadians because it has helped thousands of senior Canadians deal with the most common financial struggles.

How a Reverse Mortgage can help

The CHIP Reverse Mortgage can provide your aging parent(s) with financial independence by unlocking up to 55% of the value of their home (tax-free) without them having to sell or move, in either a lump sum amount or monthly advance.

Contact your Dominion Lending Centres mortgage professional to get your free estimate or to find out more information about how a CHIP Reverse Mortgage can help.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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Pre-approvals are certainly beneficial. However, they can also be very disappointing if you are not prepared to know what they actually mean.

They DON’T mean…

They don’t mean that you have a mortgage.Until there is a Purchase Agreement (a written up contract to purchase a property) actually submitted to a bank and a commitment from the bank offered to the client, there is no mortgage. Your bank will often say, “You are pre-approved on a mortgage based on a specific rate that is being offered during this time.” Factors such as the amount of income you bring in, the amount of debt you have and even the property itself will determine whether or not the bank will actually give you a mortgage.

They don’t mean that the rate you are pre-approved for will be the rate you pay. Rate holds are temporary and depending on whether or not you qualify for the rate, you may not get what you initially bargained for.

To get a pre-approval that is solid it is important to know exactly what the terms of the pre-approval mortgage are. Pre-approvals should show exactly what you qualify for in terms of how much money you will be able to borrow for a mortgage based on your financial profile.

A good pre-approval…

A good pre-approval will reflect that you properly income qualify. As mentioned previously, many banks will give you a pre-approval based on a rate guarantee, NOT ON YOUR INCOME. This means that you may be in a lurch because the bank has not pre-approved you properly. A good pre-approval will be based on asking for documents to prove your income. The last thing you want is to be “pre-approved” only to be told after you’ve made an offer on a property that you actually don’t qualify.

A good pre-approval will let you know how much money you will need to provide for a down payment along with closing costs. There are more costs involved in purchasing a property than just the down payment. Costs such as legal costs, title transfer costs, property transfer tax costs (if applicable), appraisal costs (if applicable), etc. are often not talked about when initially going to your bank to ask for a mortgage loan.

A good pre-approval will secure a rate for 90 to 120 days. If rates are trending down, even when you have a negotiated pre-approval rate, you should be able to take advantage of the lower rate. Pre-approvals are excellent when rates are trending up. They secure the lowest rate, even when the bank has raised their rates. But be careful! Every bank has their own guidelines as to guaranteed rates and whether or not they will commit to the lower rate they initially negotiated with you.

A good pre-approval will be aware of lender guidelines concerning properties. Appraisals are not done for a pre-approval. But when contracting for a mortgage, depending on amount of down payment, contract details, etc. you may have to have one. The lender and the insurer ultimately look at the property to see if they deem it marketable and low risk for resale.

A good pre-approval gives the Realtor sure negotiating power. In today’s market there are properties selling so fast that financing has to be secured before going in to make an offer. A good pre-approval ensures that your chances of getting an accepted offer on a popular property are sure. Taking part of a multi-offer negotiation increases your opportunities for success, which can only be the result of a firm pre-approval.

A good pre-approval will prepare you for what you should expect your monthly mortgage spending budget to look like. With your pre-approval in place you know what kind of payments to expect, including the amount of taxes, strata fees (if applicable), etc. you will likely be paying. Your pre-approval explores the costs involved in purchasing a property and carrying a mortgage.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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What’s a pension? I don’t have one. In today’s day in age there are not many people that will have one when they retire. So it’s up to us, as individuals, to create our own – build your net worth from within. There are many ways to create a pension plan, acquiring rental properties is just one of them. Many of the wealthy people these days have utilized real estate to grow their empire, whether it’s through buying and selling or buying and never selling. When acquiring a portfolio of properties one is able to plan for continual growth by utilizing the potential cash flow and accrued equity to purchase a second, third, fourth…property.

First step is to determine your budget, which may ultimately be decided by how much of a down payment you have as well as to figure out what your monthly comfort level is for cash flow. For all intents and purposes I will be using values and amounts from my local area on a relatively new 1 bedroom/1 bathroom condo. With newer units comes less risk of future assessments. Do your homework*.

Purchase Price: $225,000
Down Payment: $45,000 (20% minimum, lender may request more)
Mortgage Amount: $180,000
Mortgage Insurance: $0 (lender may require depending on how income is reported)
Total Loan: $180,000

Variable at 2.40% (P-0.30%) 5 year term CLOSED 30 year amortization
Monthly Mtg Payment: $700.79
Est. Monthly Strata: $200
Est. Monthly Property Tax: $100 ($1,200/year)

TOTAL Monthly Payment: $1,000.79

Property Transfer Tax:

$2,500 (paid at completion, cannot be rolled into the mortgaged. It is calculated based on 1% of the 1st $200,000 and 2% on the remaining balance.) To calculate Property Transfer Tax http://www.bcrealestatelawyers.com/ptt-calculator/

Appraisal:

$300 (required to validate the purchase price because there is no mortgage insurer involved; CMHC, Genworth or Canada Guaranty).

Home Inspection:

$400 (highly recommended)

Title Insurance:

$200 (In short, title insurance is an assurance as to the state of title of a given property. In practical terms, it protects lenders and purchasers against loss or damage suffered due to survey problems, defects in title and other matters relating to title as specified in the policy.

Approx lawyer fees:

$1,500

The cost to acquire the property was $4,900.

Well that was easy, you just purchased a rental property…NOPE, you are just getting started. The obvious goal is to pay off the mortgage with the rent ($1,200/month) coming in.

Yearly Cash Flow
= Rent – Mortgage Payment – Property Tax – Heat – Strata – Renters Insurance** – 3% Vacancy
= $14,400 – $8,409.48 – $1,200 – $1,200 – $2,400 – $500 – $432
= $258.52

Positive cash flow is ultimately what you are seeking with a rental property, however this is not always attainable from the start. Just because there is positive cash flow at the beginning DOESN’T mean that you should start paying yourself (a pension), and that amount of $258.52 is yearly. So more or less this property just breaks even.

Because the real estate market is cyclical we are going to estimate the increase in market value by a modest 3%, year over year, some years more than others. Along with calculating the year over year market value increase we will look at how the mortgage balance has decreased over time. Remember the purchase price was $225,000 and the starting mortgage amount was $180,000.

If you would like more information, please contact your local Dominion Lending Centres mortgage professional.

Legend

*Read everything single piece of information provided by the seller and strata; AGMs, strata minutes, property disclosure statement, Form B as well as the depreciation and engineers report if available.

**Renters insurance (purchased by the property owner) has many variables to consider for the cost; detached home, condo, townhouse, location, value of personal contents, any betterment and improvements.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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When you purchase a property, you may be a little overwhelmed by all the insurance offers related to purchasing a new property that come your way. Mortgage Insurance, Condo Insurance, Mortgage Default Insurance, Earthquake Insurance; the list goes on and on. It can be confusing and it is important to know what insurance covers what.

For instance, Mortgage Default Insurance is solely for the purpose of the lender and not to be confused as mortgage default insurance for the consumer. Yet, you, the consumer, are responsible for the cost. If you put less than 20% down on a property purchase, you are responsible to pay for Mortgage Default Insurance which covers the lender if you should default on the payment of your mortgage. As well, conditions of the mortgage may require that House/Condo Insurance needs to be purchased in order to fund the mortgage as to protect the consumer and ultimately the lender from severe losses. This kind of insurance may or may not be mandatory.

Alternatively, Mortgage Life Insurance is not mandatory and is purchased to cover the mortgage if the consumer becomes seriously ill or even dies unexpectedly during the term of the mortgage. Usually, this is purchased when the owner of the house has a family or dependents that will inherit the property and would not be able to financially carry the property without the primary owner’s income. The only difference between Term Life Insurance and Mortgage Life Insurance is that the Mortgage Life Insurance is meant to pay off the consumer’s mortgage. But, depending on the policy, the money that is issued on the Mortgage Life Insurance can be designated for the mortgage only. Or, it may be available for other, more necessary expenditures. It all depends on the policy.

Mortgage Life Insurance is certainly a recommendation for those that have not yet saved up enough to be able to secure themselves with savings such as RRSPs or Pensions. Whether the consumer purchases it through a referral from their Mortgage Broker or perhaps has it already through their employment, Mortgage Life Insurance is a wise choice for anyone who wants to set their future up securely.

Top 9 Benefits of using Mortgage Life Insurance

1. Peace of mind – having Mortgage Life Insurance creates a sense of security that your loved ones will be well taken care of if you, as the main breadwinner of the family, pass on.

2. Easy to get – Mortgage Life Insurance is based on the mortgage and your age. There are a list of standard questions to answer but coverage will never be denied.

3. Mortgage paid off in the case of death – having Mortgage Life Insurance ensures an extra level of coverage, whereby any other policies that are held will be able to assist with other needs.

4. Family can stay in their home – if there is the unfortunate life event that is the death of the Mortgage Life Insurance policy holder, the mortgage will be paid off which will allow the family to stay in their home and not become displaced, causing more despair than needed.

5. It protects your family’s finances – Mortgage Life Insurance pays off the mortgage, which means that your family’s finances stay intact.

6. Lost wages – if you become seriously ill, Mortgage Life Insurance can cover your mortgage payments for a specified time period (ie up to 3 years). Unexpected life events such as a serious

car accident can result in missed mortgage payments as a result of loss of wages as you need to recover from injuries.

7. Portability – some Mortgage Life Insurance policies are portable. Which means that if you buy a new property, you will be able to transfer your Mortgage Life Insurance to a new property. Make sure you ask your Insurance Provider if the insurance they are recommending is portable. Take note that when the bank offers you Mortgage Life Insurance you will not likely be able to transfer your Mortgage Life Insurance to a new lender, thereby limiting your future financing options.

8. If you are a young buyer, your Mortgage Life Insurance premiums will be very low. Which means that this insurance is extremely affordable for a young, and likely, first time home buyer.

9. Good health now results in coverage for unexpected illness later on. After illness strikes, it is more difficult to acquire life insurance.

Mortgage Life Insurance is an option that anyone with a mortgage can consider. However, it is important to know what your options are in regard to the Mortgage Life Insurance itself. Asking your Mortgage Broker for a referral to a reputable and credible Insurance Representative is paramount in finding an Insurance Broker that knows available products, that specifically fits your needs. Every individual is unique and needs an insurance product that is fashioned for their individual situation. A good Insurance Representative will be a Broker that knows what insurance products are out there as well as knows what you, the consumer, needs. The great thing about taking on Mortgage Life Insurance is that you can cancel anytime if at a later date you find an insurance product that suits you better.

Remember to take inventory of insurance products you are already signed up with. If your employer provides you with a benefits package, make sure you find out exactly how much coverage you have and if that coverage will adequately provide for your financial needs. If it does, then maybe you don’t need any Mortgage Life Insurance. On the other hand, if your current coverage won’t be enough, then maybe a good Mortgage Life Insurance policy is something to consider.

For more information regarding Mortgage Life Insurance contact any of the 2,500 mortgage professionals at Dominion Lending Centres and we’ll put you in contact with an Insurance Representative that will provide you with viable Mortgage Life Insurance options.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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With plenty of activity in the real estate market and more new building slated over the next few years, here is my list of “Things to Consider When Buying in a New Development”.

Representation

Some buyers attend the display suite and consider a purchase directly with the developer sales person or the developers Realtor. Regardless of which kind of property you choose to purchase – new or existing – I always suggest you have a Realtor represent you. I have seen contracts where the buyer has not reviewed the details properly and they are not fully informed before they sign. The developer’s agent or Realtor is acting on behalf of their client – the seller. You should also have your own representation.

Interest Rates

If you are buying a home more than a year or more before completion, you may not know your actual fixed costs for the mortgage until well after you have signed your purchase agreement and paid your deposits. Depending on the lender and timeline, your costs may be unclear for several months. Even if you have a rate hold – things can change along the way with financing rules or the market. I always keep in touch with my clients and within a few months of completion we revisit the overall plan and make some decisions. Your down payment may need to change, the property value may shift or you may have experienced a life changing event (please don’t quit your job). Remember: Keep your mortgage broker in the loop.

Goods and Services Tax (GST)

When you buy a newly built home pay special attention to the contract price. In Canada Goods and Services Tax (GST) of 5% is payable on the purchase of a new home. In many cases the purchase price is set excluding GST so you need to add that tax amount to determine the total purchase price. If the home price is under $450,000 and will be your primary residence, you are eligible to receive a rebate equivalent to 36% of the GST. The rebate will be deducted and the new purchase price will be set Net of GST. There are many online calculators to determine this number and it should also be clear on the purchase agreement. Your mortgage broker will also calculate to confirm. For example a $400,000 purchase price excluding GST will result in an actual purchase price of $416,850. ($20,000 in GST minus the rebate of $3150). A purchase price of $500,000 excluding GST will result in an actual purchase price of $525,000 ($25,000 GST and no rebate).

Allowances and Discounts

In some cases you will have the option to upgrade the home with higher quality items such as flooring or a basement. These items can be included in the purchase price with no additional cost. The agreement will clearly outline the details and no cost will be associated for these items. However, if the contract states there was an allowance as a credit with a cost associated this will be considered a buyer credit and the amount on the contract will be deducted from the purchase price by the financial institution. There will be no financing on these items and the buyer will be responsible for the additional cost. This is common when buyers want to include furnishings such as in a display home. This can be a surprise to buyers as they are not fully clear on the purchase price and what is really included. It is important to review the contract closely with your own buying agent (Realtor) and if any financing questions arise – with your mortgage broker – to ensure you know your options.

Property Taxes

When a developer applies to the local city for a building permit the city will set the municipal taxes for the entire development. Once the developer is near completion and applies to the city for occupancy permits or submits the strata plan (for condo developments) it can still take some time for the city to determine the property tax for each home or condo unit. More and more lenders are using a percentage of the purchase price to determine the property taxes at the time of application unless confirmation of taxes can be provided by the city. In some cases this can be .5%-1.75% of the purchase price which can make a difference to qualify for financing. Your Dominion Lending Centres mortgage broker can review options with you to select the best overall financing solution for your purchase and avoid delays in securing an approval.

Strata fees – start low and grow

Since the strata plan on a new condo development isn’t in place when you make an offer to purchase a new home the strata fees on the purchase agreement will be set low. I recently had a client purchase a condo for $750K and the strata fees were under $170 per month. My clients understood this strata fee will increase to a higher level once the operating budget is set by the strata council and they should set their personal budget accordingly to expect an increase. For more details on the process and to understand the responsibilities of the developer, the strata corporation and the new buyer, click here.

Assignments

When a developer sells their houses or condo units well in advance of completion some original buyers may decide not to complete on the purchase and choose to assign the property to a new buyer. In this case there may be a lower or higher new purchase price. If there is a lower price the GST on the original price will apply. If the price is higher the GST on the original purchase price will apply. The property purchase transfer tax will apply to the new purchase price. The final property purchase transfer tax will be determined depending on the details of the transfer and the value of the property within limits for exemption is typically set by provincial government. For financing purposes, not all lenders will consider an assignment as the new purchase contract is between the original buyer and the new buyer and not with the developer. Some lenders will only consider the original price and the new buyer will have to pay the difference between the two amounts as the down payment to complete the purchase. Lenders who consider the new price will require a full appraisal to confirm the current value of the property. They will also need the original contract in addition to the new purchase contract and want to know details on the relationship between the seller and the buyer. There are many things to consider when you purchase a new home. Always consult your professional advisers, including your Realtor, Mortgage Broker, Financial Planner, Accountant and Lawyer to ensure the purchase helps to meet your lifestyle and financial goals.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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Did you know you can get a mortgage for renovating your home? Many home buyers and existing home owners are deciding to get more bang for their buck by purchasing a home that needs some improvements. Whether you are renovating at the time you buy or waiting for a few years, there are financing options available.

For home buyers, you may want to consider a “purchase plus improvements” mortgage when renovating your home. Many lenders offer these even if you only have a 5% down payment. The lender will require proof of the work to be completed in renovating your home. They will add this quoted amount to the purchase price, deduct the down payment and determine your mortgage amount. If you are buying with less than a 20% down payment, insurance fees by CMHC or Genworth will be added to the mortgage. The lender and insurer will typically allow a maximum of 10% of the value of the home to a maximum of $40,000-$50,000. If it is going to cost much more for renovating your home a construction draw mortgage would be required.

At the time of completion on your purchase, the lender will fund the mortgage proceeds to the lawyer and condition a hold back for the renovation funds. You will have to use your own funds (or borrowed from family or your line of credit) for renovating your home. The remaining funds will be released by the lawyer upon proof (appraisal) confirming the work quoted has been completed. There is typically a 90 day period for work to be complete but this can be extended if required. Of course, during this time you are making mortgage payments on the full mortgage amount.

Buy a home $500,000

Renovate $ 50,000

Down pay $110,000

Mortgage $440,000

For existing home owners the same financing option for renovating your home is available. The one exception is your maximum mortgage amount for the existing mortgage and new funds for renovating your home can’t exceed 80% of the value of the home.

For a complete guide to renovating your home check out http://www.bcliving.ca/home/complete-guide-to-managing-a-home-renovation

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

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