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Things to Look for When Buying a Vancouver Home – Consult a Vancouver Mortgage Broker

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Things to Look for When Buying a Vancouver Home

When you’re looking to buy a home, especially an older home in the Vancouver area, you need to look it over with a very critical eye. Even though you might not be especially savvy in spotting flaws, there are some specific areas of the home that should be carefully examined.

You will eventually use a home building inspector to exam a home in greater detail, but there are some spot checks you can do beforehand when you first visit a home. By being especially observant when you visit your next potential home, you can save yourself some wasted time and money.

Start with the Exterior

There are 3 main areas on the exterior of any home that you closely observe. This includes:

• The roof of the home
• Windows
• The exterior foundation

When you are looking at the roof, you want to be looking for the following:

• Buckling, sagging or warping
• Examine the state of the shingles and look for missing shingles, torn or curled shingles and signs of repair. The colour of the shingles can also tell you something about the state of the roof.
• You also want to look for excessive weathering, moss/fungus build-up.
• You should look closely at the state of the gutters
• Always ask about the age of the roof as most roofs are only good for between a minimum of 10 to a maximum of 25 years

Take a close look at the windows. Some of the things to keep in mind are:

• Whether the windows are single or double pained.
• The type of frame and whether they are well maintained or showing signs of rot – especially if they are wood frames.
• Look at the caulking and see if it looks fresh or is cracked, withered or lacking.

Take a walk around the entire home and closely examine the foundation and look for the following:

• Any sign of buckling, bulging, and cracks. Also, carefully look around basement windows for cracks and whether there are any signs of patch jobs. Some patches may be merely cosmetic but should prompt you to enquire further.
• You also want to examine the state of the walls and the siding. This should include the pointing in brick or stone walls. Look down the side of each wall and look for any bulging or potential weaknesses.

Things to Look for in the Interior of the Home

Several key areas in the home that you want to examine include the following:

• The kitchen and bathroom
• The furnace, water heater, plumbing and electrical
• The basement walls
• The attic

The kitchen and bathroom areas are fairly self explanatory. You simply want to eyeball the age and state of each room as any upgrading or renovations you might have to undertake can be fairly costly. Cosmetic renovation may be less expensive depending on your requirements.

You will want to scrutinize the state and quality of both furnace and the water heater. Look for rusting, leaks, staining and the overall appearance of both.

You might want to also eyeball the age and condition of what you can visually observe about the quality and age of both plumbing and electrical systems in the home. Having to upgrade either system to bring them up to code can also be very expensive.

You also want to carefully look at the state of the basement walls to look for any possibility of leaks, wall buckling, cracks or signs of mould or discolouration. Note the smell of the basement for any indication of mildew or excessive dampness.

The final area you want o look at is the attic if it’s easily accessible. Here you can look for any signs of leakage such as staining or rot.

Buying a home is an expensive investment. You might fall in love with the place but you don’t want to be stuck with a bottomless money pit either.

Bankruptcies down, but more Canadians negotiating way out of debt: report

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An increase in the number of Canadians negotiating their way out of debt troubles is changing the composition of Canadian insolvency figures.

The number of bankruptcies in Canada has fallen back to pre-recession levels, according to a CIBC report released Monday, to 4 insolvencies per 1,000 of the adult population from an all-time high reached during the recession of 6 per 1,000. But the number of Canadians striking consumer proposals (when a consumer negotiates to repay only a portion of his/her debt) has grown to 40 per cent of total insolvency cases from about 15 per cent in 2006 – an increase that underscores a major shift in how Canadians are avoiding the bankruptcy route.

“I think that one should not just look at bankruptcy as many people do, and say ‘OK, bankruptcies are going down’ but look at the other component of insolvencies which is becoming more and more important now,” said Benjamin Tal, deputy chief economist at CIBC World Markets Inc. and the report’s author. “Before it was not really an issue because proposals were very small, but currently, proposals actually make up 40 per cent and in Ontario 50 per cent of total insolvencies, so they’re big enough to make a difference.”

Structurally, there had been an increase in the number of insolvencies leading up to the recession since the 1990s – a rise that reflected the growing number of proposals, said Mr. Tal. While the number of personal bankruptcies has fallen more than 7 per cent since the recession, the number of proposals has continued to rise during the recovery.

Following a change in regulation in 2008 which saw the Bankruptcy Insolvency Act modified to increase the limit to $250,000 from $75,000 in non-mortgage debt allowable for a proposal, the rate of proposals has risen rapidly from about 15 per cent of all insolvencies in 2006.

Ontario leads the provinces in the share of proposals in total insolvencies with a higher than 50 per cent share.

A lag between changes in insolvencies and labour market performance, including a slowing of the labour market to a pace not seen since the recession, likely means that the insolvency rate will stabilize at its current level or even start edging higher in the coming year or so, said Mr. Tal.

CMHC moves to take steam out of housing market – Consult with a Vancouver Mortgage Broker

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TARA PERKINS- The Globe and Mail

Ottawa is taking new steps to cool the country’s housing market.

mortgage-backed securities. The measure comes amid the federal government’s efforts to protect taxpayers from financial risks in the housing sector, further cool lending and add upward pressure to mortgage rates.

The Crown corporation has notified banks, credit unions and other mortgage lenders that they will each be restricted to a maximum of $350-million of new guarantees this month under its National Housing Act Mortgage-Backed Securities (NHA MBS) program. The decision comes in the wake of “unexpected demand” for the guarantees, a spokeswoman for CMHC said in an e-mailed statement.

The conversion of loans into securities with CMHC backing has become a popular way for lenders to tap funds from a broad range of investors, enabling banks to issue more mortgages and at a lower cost.

Federal Finance Minister Jim Flaherty, concerned that Canada’s housing market might overheat and infect the economy, has been taking steps to cut back the flow of mortgage credit. This spring, he went as far as to publicly chastise some banks for dropping their mortgage rates too low.

He is also taking steps to reduce the degree to which taxpayers backstop the housing market.

This year, he announced he would restrict the ability of banks to buy bulk insurance from CMHC, and he curtailed the use of government-backed insurance in securities sold by the private sector. Ottawa released a legal framework for covered bonds, another type of bond backed by pools of mortgages, last year. It said banks could not use insured mortgages in such securities.

In addition to removing fuel from the housing market, these moves force banks and other lenders to take on more of the risk of mortgage defaults, rather than offloading that risk to Ottawa.

Canada’s housing market slowed in the wake of the government’s moves, namely Mr. Flaherty’s decision last summer to tighten mortgage insurance rules. Still, prices in most areas continued to climb, and sales have begun to bounce back.

“The government is attempting to tighten credit conditions for home loans, for example the changes to CMHC’s underwriting standards last year, and this is the latest iteration of that effort,” said National Bank analyst Peter Routledge.

He said that the four largest mortgage underwriters, Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Bank of Nova Scotia, had made good use of the NHA MBS program “and I expect that their funding strategies will change as a consequence.”

“Given the differentials in funding costs via NHA MBS or unsecured long-term funding, I could see [an additional] 20 to 65 basis points in the cost of funding mortgages for the larger banks,” he said. “All else equal, we could see mortgage rates start to move up in unison.”

At the start of this year, after consultations with CMHC, Mr. Flaherty said the Crown corporation could guarantee a maximum of $85-billion worth of new NHA MBS this year. By the end of July, lenders had already issued $66-billion worth of the securities, compared to $76-billion during all of 2012. As a result, CMHC is imposing the $350-million cap on each issuer effective immediately, while it comes up with a formal allocation process this month that it will put in place for the final four months of the year.

The Crown corporation guarantees timely payment of interest and principal to investors in both types of securities, and charges the banks a fee for the service.

On its website, CMHC states that “MBS [have] helped to ensure a ready supply of low-cost funds for housing finance and to keep mortgage lending costs as low as possible for homeowners.”

Mr. Routledge said that smaller mortgage lenders don’t create enough NHA MBS to be materially affected by the new $350-million cap.

The amount of NHA MBS being issued shot up during the financial crisis, as banks sought cheaper sources of funds to continue lending mortgages. The securities are backed by pools of insured mortgages, and investors receive monthly principal and interest payments that stem from the payments homeowners make on the underlying mortgages. Banks sell the securities to investors, or to be used in the Canada Mortgage Bond program.

What to Consider When Buying a Vancouver Condominium – As a Vancouver Mortgage Broker

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What to Consider When Buying a Vancouver Condominium

Vancouver condominiums are sprouting up all over the city and are a popular purchase. They are especially popular with young single professionals and busy couples who just don’t want the hassle of yard work and maintenance.

A condominium can be a good investment but one has to carefully consider the prospects of the condominium market as their value can vary somewhat differently from the standard housing market. You can also use your investment in a condo as either capital appreciation, a speculative investment or as rental income and pay for it by subletting it to a tenant.

Buying a condominium is pretty much the same as buying a single family home but there are some significant differences to keep in mind before you take the plunge. One of the key approaches in making your investment pay off is to perform some careful research beforehand as not all condo properties are the same. Some investments can be riskier than others.

Here are some things for you consider before you jump into the condo market.

Make Sure you Understand the Condominium Market

You have to take a close look at the neighbourhood you considering. Some neighbourhood areas may be somewhat glutted with available units. These areas may lose value quicker if the market cools.

Don’t be drawn in so readily by some of the sales pitches being tossed about when it comes to new projects being proposed. Make sure you carefully research the developer beforehand and perform some extensive research to ensure they are an established and financially sound company.

Be Clear on your Reason for Buying a Condominium

Remember that this is a major investment on your part. This could be an investment which requires you to be in for the long haul of at least a minimum of 3 – 5 years. If you are single, then you want to be confident you will be remaining in the city for awhile and that your employment prospects have a solid footing.

Ask yourself why you want to make this investment and what your short and long investment objectives are going to be for your investment. More importantly make sure they are realistic and don’t just consider the best case scenario. You also have to consider how you are going to deal with a worst case scenario.

Research the Local Area

Take a good look at the neighbourhood where you are considering making your condo investment. Ask around and see if the area is in decline or if it’s on the upswing with new or major projects or development on the horizon.

You might be considering a condo for its view of the mountains or ocean for now but a new high rise project could end up taking that selling feature out of the picture down the road.

Don’t Forget About Extra Costs

If you are new to real estate investment then one of the key areas that many newbie’s tend to overlook are the amount of cash you need to have on hand for closing costs. This amount can range anywhere from .5% to as much as 2% of the purchase value of the unit.

Don’t forget to budget for the cost of condo fees which is above and beyond what you pay for mortgage. Condo fee contracts also vary considerably so make sure you know what the terms of the contract entails.

And, if you are putting less than 20% as a down payment, you will also have to consider the extra expense of mortgage insurance.

A condo can be an excellent but should but make sure you take the time and perform a lot of research before you take the leap so tour eyes are wide open as the condo market can be volatile.

Canada’s real housing crisis: Extreme weather – Consult with Bruce Coleman, Vancouver Mortgage Broker

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BLAIR FELTMATE AND JASON THISTLEWAITE – The Globe and Mail

Over the past three years, Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney (now Governor of the Bank of England), tightened mortgage lending in an effort to avert a housing crisis that might otherwise result when interest rates rise.

While their efforts were laudable, they missed an equally great threat that is now on the landscape: The potential of extreme weather to render large sectors of the Canadian housing market uninsurable, which in turn could impact the mortgage market (without home insurance, you cannot qualify for a mortgage).

So, how can extreme weather, primarily in the form of torrential rain and flooding, threaten Canada’s insurance and mortgage market?

At first glance there wouldn’t seem to be a problem. To illustrate, as extreme rain of the type recently seen in Calgary and Toronto continues to flood basements en masse across Canada (and climate models point directly to this future), insurance companies could offset claims by raising premiums – homeowners might complain about higher premiums at first, but soon they would capitulate. Unfortunately, there is one lamentable flaw in this argument – homeowners do not have an endless supply of disposable income, as Mr. Flaherty perpetually reminds us, and at some point higher insurance premiums will become cost prohibitive for homeowners, which in turn will impact home sales and the mortgage market.

Losses being realized by property & casualty insurance providers in Canada are going up due to extreme weather and flooding. According to the Insurance Bureau of Canada, from 1990 to 2002 the collective premiums received by property insurers exceeded losses for each year, which was good. However, given the advent of extreme weather and flooding, this situation reversed itself over the period 2003 – 2012, with losses exceeding premiums for seven out of nine years, resulting in a total cumulative loss during this period of approximately $11-billion.

Clearly, the property & casualty sector in Canada has a big challenge to address. Indeed, Intact Financial Corporation (Canada’s largest property & casualty insurer) confirmed in a July 22 press release, that it recorded an after-tax catastrophic loss of $123-million, net of reinsurance, in its second quarter alone. Intact CEO Charles Brindamour admonished that “the scope of the damage and destruction that we have witnessed in recent weeks [in Canada] is a stark reminder that we must adapt the protection offered to Canadians to ensure it remains sustainable in light of the greater prevalence and severity of weather events.”

Heeding the advice of Mr. Brindamour, what should be done to address severe weather?

At least four courses of action should be pursued now. First, Canadian cities and towns should produce up-to-date maps of flood plains, which can then be used to provide guidance on where not to build houses. Second, we must weather-harden city infrastructure by increasing the permeability of our concrete-dominated urban spaces – bioswails (ditches filled with rocks and plants that are open on the bottom) and permeable surface parking lots should be common features of landscape design. Third, we must modify building codes to take adaptation measures into account: New homes, for example, should be mandated to have back-water valves installed in basement drains, thus preventing sewer back up. And lastly, we need to work aggressively with homeowners to help them better prepare their homes for extreme weather. This effort would include contouring around houses to direct water away from foundations, and ensuring that eaves and down spouts remain clear.

Taking a cue from insurance companies, some banks have entered the early stages of addressing extreme weather. For example, Scotiabank identified a variety of Alberta postal codes where additional scrutiny will be required to approve a mortgage given the exposure of these areas to recent unprecedented flooding.

In the absence of addressing extreme weather adaptation, Canada will select for an uninsurable housing market that will in turn impact the mortgage sector. Mr. Carney made a name for himself in Canada as a leader who helped avert a housing crisis – for Stephen Poloz, Canada’s new Governor of the Bank of Canada, he might help to avoid another form of housing crisis borne of climate change – he could start by using his considerable influence to encourage governments and industry to weather-harden city infrastructure.

Blair Feltmate is associate professor, Faculty of Environment, University of Waterloo; Jason Thistlethwaite is assistant professor, Faculty of Environment, University of Waterloo

More on CMHC’s MBS Ceiling – Ask Bruce Coleman, Vancouver Mortgage Broker

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More on CMHC’s MBS Ceiling

Home Series: Hiring a Vancouver Contractor – Consult with a Vancouver Mortgage Broker

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Hiring a Vancouver Contractor

Choosing a Vancouver contractor for home renovation project should not be done lightly as not all contractors are the same. An inexperienced contractor can turn your project into an expensive nightmare.

When you hire a contractor you need to ensure they are a true and knowledgeable professional. It doesn’t matter if your project is small or major in scope because you want it done right and in a timely manner.

Here are some things to consider when hiring a contractor in the Vancouver area to help you get stated down the right path to success.

How to Choose a Vancouver Contractor

There are pages of them in the yellow pages so it can be daunting if you go that route. You might be better off simply by asking around and find one or more recommendations from people you know. You can start with other members of your family and ask them who they might have used and whether they might recommend their services to you.

You could ask spread the net further afield and ask you friends and your co-workers. You might also simply ask some of your neighbours if you noticed that they just recently had some work done to their house.

Vancouver Contractor Licensing Requirements

Either way, one thing to keep in mind is that a general contractor has to be licensed. Licensing is required under the B.C. Homeowner Protection Act and that different types of building aspects have different and specific licences that the contractor must have in place before they can perform a project. To obtain a license, a contractor must first be eligible to have warranty insurance.

Ask them to show proof of their licensing and ensure any subcontractors they use are also properly licensed. Check out the website for the B.C. Homeowners Protection Office so you understand what you need to know and ask your contractor.

Ask Questions

Just because they are a licensed and experienced contractor doesn’t necessarily mean they have any experience doing the project that you want completed. Ask them what similar projects they have completed and always ask them for references that you should also contact.

You want to know if the contractor will obtain the appropriate permits and that they are covered by Workers Compensation. Additionally, you might want to ask whether they are going to submit a contract which might require some amendments to customize it to your particular project.

Make sure you are very clear about the start and completion date of your project and ask them what insurance coverage they carry.

Your contractor should provide you with clear and ongoing communications especially if they encounter any unforeseen problems. Touch base with contractor on a frequent basis and keep the lines of communication open.

Never sign off on a project until you have very carefully inspected the work and are satisfied that it was completed to your satisfaction.

You should also not be shy by asking up to at least three contractors to put a bid in for your project. If there is a significant variance in the bids being offered you will want to clearly understand the reasons for such a variance. The lowest bid is not necessarily the best bid.

You also have some obligations in that you must be very clear on what you want to achieve in terms of your renovation and the materials involved. Any changes that you make will also necessitate changes to the scope of the contract and the costs involved as flexibility is required by both parties for these types of issues.

Explaining the FTHB Tax Credit and the Home Buyers Plan – Ask Bruce Coleman, Vancouver Mortgage Broker

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Explaining the FTHB Tax Credit and the Home Buyers Plan

If you are a first time home buyer in Vancouver then you need to know about the FTHB (First Time Home Buyers) Tax credit and the HBP (Home Buyers Plan).

Saving the down payment for your first home is challenging enough. However, what many first time home buyers often forget about is the extra cash they need to have on hand for their closing costs.

When you buy a home there are additional fees you need to have on hand such as legal cost, taxes that have to be paid out for transferring the land, and other applicable disbursements. Closing costs can range from between 0.5% to as much as 2% of the purchase price of the home you are buying.

This can take out a big chunk of the savings you have on hand.

How the FTHB Tax Credit Helps First Time Home Buyers

The First Time Home Buyers Tax Credit was implemented by the Canadian Government in 2009. The purpose of the tax credit was to help first time home buyers with these added costs.

A qualified applicant can claim up to $5,000 non-refundable tax credit on any home purchased after January 27, 2009 and can receive as much as $750.00 in tax relief.

Qualifying for the HBTC

You can qualify for the tax credit along with your spouse or a common-law partner so long as neither you, your spouse or common-law partner have not resided in another home owned by any of these applicable parties in either the year the new home was purchased or in any of the 4 years proceeding.

A person with a disability, or if you are buying a home for a person with a disability, may be exempted from having to be a “first time home buyer” to qualify for the tax credit.

The house you purchase must also be considered as a “qualifying home” as well. Most types of home that can be bought qualify for this tax credit. This includes the following:

• Single family homes
• Semi-detached homes
• Townhouses
• Mobile Homes
• Condominium Units
• Duplex apartments
• Fourplexes
• Apartment buildings
• A share in a co-operative housing corporation

Another requirement is that you must occupy the home being purchased as a principal residence for either yourself or for the person who has a disability no later than one year when the home was purchased.

Who Can Claim the Tax Credit?

You, your spouse or common law partner can claim the tax credit. You can also share the credit jointly so long as the combined claim is not in excess of $750.00 in total.

Where Can you Claim the Tax Credit?

You can claim the tax credit on the specified portion of your personal income tax form that you complete for Revenue Canada for the year in which you purchased your first home. You will not have to include any specific documents, but should have the information available as it could be requested by the CRA (Canada Revenue Agency).

Home Buyers’ Plan (HBP)

Additionally, the Federal Government allows all Canadians to use their RRSP monies towards a down payment when buying or building a home. This money can withdrawn tax free from your RRSP so long as it is used towards the down payment of a new home.

You currently withdraw as much as $25,000 tax free from your RRSP providing the funds withdrawn have been in an RRSP for at least 90 days before being withdrawn.

Additionally, any RRSP monies which are being used towards your down payment must be re-paid in 15 years until the HBP money balance is fully reimbursed. If you do not repay the money that is due in any particular calendar year, then that amount will have to be declared as income for that year on your tax form.

This Change Will Have a Direct Impact on Rates – Ask Bruce Coleman, Vancouver Mortgage Broker

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Robert McLister is the editor of CanadianMortgageTrends.com and a mortgage planner at Verico IntelliMortgage, a mortgage brokerage.

You can also follow him on twitter at @CdnMortgageNews

101 Home Series: Adding a Secondary Suite to Your Vancouver Home

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Adding a Secondary Suite to Your Vancouver Home

Buying a home in Vancouver is a fairly expensive proposition these days. But, there is one strategy you might consider to offset the amount you pay on your pricey mortgage. You might consider adding a secondary suite to your Vancouver home.

A secondary suite which is also sometimes known as an “in-law suite” or “accessory apartment” is essentially a self-contained living unit that offers both kitchen and bathroom facilities. You can convert a portion or your home such as the basement area and rent it out for additional income.

However, before you jump on the band wagon and start renovating, there are number of things to consider beforehand.

Know What Regulations Apply

If you do plan to renovate your home or an already existing secondary unit you must ensure that you are in full compliance with any and all applicable zoning, by-laws, and any municipal/provincial building code and fire codes that must be satisfied.

Check Out Your Vancouver Zoning By-Laws First

Fortunately, Vancouver has one of the more liberal zoning by-laws when it comes to adding a secondary suite to your home. In Vancouver, you can add a secondary suite to any detached home in the city located in the RS, RM and RT zones.

The City of Vancouver has also relaxed requirements for the following:

• Reduced ceiling height requirements
• Reduced requirements for sprinkler systems
• Allowing full basements to include basement suites which are both liveable and functional

The City of Vancouver also provides a detailed guide which explains how you can legally conform to all their requirements for either an existing suite or what you need to do to create a new suite.

The best way to get started to find out what you need to know to meet the health and safety requirements you should contact the city and arrange for an inspector to come out and examine the space which you plan to renovate.

Make Sure You Comply with Building and Safety Codes

Your secondary suite must also comply with any applicable municipal and provincial building and safety codes. Their purpose is to protect the health and safety of your secondary unit occupants.

British Columbia has construction and design requirements that specifically address the renovation and alterations that apply to secondary units and which differ from new construction.

Some municipalities within the Vancouver also have additional specific requirements that must be followed so you should ensure that you are in full compliance in the area where you live.

Other Consideration for a Secondary Unit

You should also be aware of some other aspects of constructing a secondary suite you will encounter. You will likely be increasing the value to your residence by adding a secondary unit which will most probably result in increased property taxes.

You will also have to contact your insurance agent as you will have to make changes to your policy and you will need to make any appropriate changes to your policy in case of an accident. A claim could be denied if the insurance company was not notified about the addition of a secondary suite.

You will also have to declare any income you receive from a secondary unit with Revenue Canada when you file your tax return.