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Buying a Vancouver House or Condo as an Unmarried Couple

Buying a Vancouver House or Condo as an Unmarried CoupleOn average, many couples these days prefer not to marry or put it off until they’re sure. More and more these days, unmarried couples are choosing to buy a home or condo together with the idea that they should rightfully reap the benefits of a real estate investment.

It’s a great idea and a reflection of modern times, but there are also some dire legal and economic pitfalls you should be very clear about before you take the real estate lunge as an unmarried couple.

As an unmarried couple you might be getting along terrifically at the moment but you also need to ask yourself – “What happens if our relationship falls apart down the road?” If that happens then you have to very clear what you’re going to be doing with the home.

If you haven’t made plans on how you intend to transfer ownership or sell the house, you could end up using it as a battleground where only the lawyers win and you both end up losing money.

Here are some things to keep in mind.

Who Owns the House?

Whosever name is on the deed of sale is the owner has all the financial responsibilities and obligations toward the home.

So, if both your names are on the deed then you are both financially responsible for paying the mortgage and taxes. If one person moves out they both still have to assume that responsibility. Similarly, they also are legally obligated to receive their respective share of any profit from the home when it is sold.

Just remember that if one person bought the house and a partner moved in later and pays rent such as splitting the mortgage, then the person paying the rent is not legally entitled to receive any profit when the home is sold unless they have entered in a separate contract which stipulates otherwise.

But common law relationships are being treated more similarly to married couples these days. However, how a common law relationship is viewed legally by the courts can be tricky and how you are defined as a common law relationship can be influenced by how long you live together and how you share or not share assets and income.

And remember, how the law views your relationship and standing now can be a totally different thing several years down the road.

It’s a good idea to seek legal advice before you take the plunge into a real estate investment as an unmarried couple so you can consider your options. It’s vital you do this before you enter into such an important investment with your eyes open and the legal pitfalls covered beforehand.

What Happens If Someone Should Die?

If an unmarried couple buys a home with both their names on the property deed, will the partner automatically inherit their partner’s half of the home? Not necessarily. Unlike a married couple where a spouse will normally inherit the deceased spouse’s portion of the home, it can be quite different for an unmarried couple.

If one of the unmarried partner’s dies and both their names are on the property deed, then the portion of the home owned by the person who dies will go to their estate, and not necessarily to the survivor. Again, the legal ramifications of a common law relationship may come to bear and pose a potential legal challenge.

The simplest way to approach this scenario and you want to ensure that your partner receives your portion of the home; you will need to draw up a will and to specify your partner inherits their half of the home as one of the terms in the will.


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Buyers of new homes should do their homework and be wary of builders who promise too much, says the man overseeing Ontario‘s regulator for home builders.

Vancouver Mortgage BrokerTarion president and chief executive officer Howard Bogach is touring the province to promote the corporation’s work and warn of illegal building practices. The Ontario government created Tarion Warranty Corp. in 1976 to regulate the building of new homes. It licences builders of new homes and condominiums and guarantees warranties.

Registered builders must have the technical competence and enough financing to allow them to absorb any losses that could arise during a home’s construction.

Bogach said buyers should “make the phone call” to learn if the builder‘s registered. Its website at www.tarion.com also has a directory of registered builders.

Customers should ask questions and not be swayed solely by the good looks of model homes, he said.

In the last five years, Tarion investigated 47 cases involving 86 homes in the Belleville area, said Bogach. It has also opened nine new cases this year. Local conviction rates weren’t available Tuesday.

“On average, 18 per cent of the claims we pay out are related to illegal building — about $1 million a year,” Bogach said.

The Ontario Home Builders’ Association and Tarion are working on “raising the bar” for registration by requiring builders to take more courses, association president Eric Den Ouden said.

Builders ought to know the new demands of the business, from science to laws to marketing, he said. Such courses would ensure they do.

It’s more regulation — something against which local builders have fought — but Den Ouden, a Belleville-based builder, said there are good reason for it: quality control for the industry and protection for buyers.

“We’re getting beaten by $5,000 on a house and a lot of times they’re losing $15,000 in product,” Den Ouden said.

Bogach said no new registration criteria would be ready before late 2014.

Red flags
Tarion Warranty Corp. is a private, non-profit corporation responsible for regulating the home-building industry in Ontario.
Under Ontario law, a builder who isn’t registered with Tarion Warranty Corp. can’t sign a sale or  construction agreement with a buyer.

  • * A warranty on a new home costs $385 to $1,500 – a cost the builder may pass on to the customer.
  • * Tarion registered 40,000 warranty forms last year and paid about $5 million to resolve the year’s 493 claims.
  • * There were 1,300 charges and 957 convictions across Ontario between 2008 and 2012. At least one violator received a jail sentence.

Tarion warns buyers to be wary if a builder says:

  • * “You don’t need a Tarion warranty because I offer my own.”
  • * “I could enroll the home in the warranty program, but it would cost you around $10,000.” (Home enrolment fees range from $385 to $1,500.)
  • * “I built the home for myself but decided to sell it instead.”
  • * “We can just put your name on the building permit.”

Source: Tarion Warranty Corp.

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“The longer it (low interest rates) goes on, the more people can start to think this is normal and it’s not normal; it’s very, very far from normal.”— Julie Dickson, OSFI Superintendent, Sept. 23, 2013 via MortgageBrokerNews.ca

Vancouver Mortgage BrokerWhen people hear an authority—like the head of Canada’s banking regulator—make these statements, it compels many to lock in to a long-term rate.

At the very least, it gets a whole lot of people wondering, “What are normal interest rates?”

If you ask many economists, “normal” is an overnight rate that’s 2.00 percentage points higher than today.

If you ask a lender, “normal” may be the 20-year average of 5-year posted rates (i.e., 157 bps higher than today) or the 20-year average of prime rate (which is 207 bps higher than today).

If you ask the Bank of Canada, its answer is: “We can expect that short-term interest rates, as is normal, will be above inflation.” Given that it tries to keep inflation near 2% long-term, a 2.50%-3.50% overnight rate seems plausible (we’re at 1.00% today).

Someone could reasonably look at all this and conclude that rates may rise up to 2.00 percentage points from here.

Does that put us “very, very far” from normal? You can decide for yourself. But an equally valid question is:

Vancouver Mortgage BrokerHow can one compare today’s normal with the norm from 20 years ago?

Long-term economic growth has never been so low. Central bank inflation targeting has never been so diligent. Nor did we (20 years ago) have the modern Internet, widespread global outsourcing and free trade, energy independence and so many other anti-inflationary mechanisms.

As a result, one could argue that long-term inflation risk (the #1 threat to low mortgage rates) has permanently diminished vis–à–vis the 1970s, 80s and 90s. Unquestionably, there will be inflationary spikes at some point. But long-term, the fundamentals support rates that are lower than their long-term averages.

So, while it’s unquestionably good public policy to discourage complacency with low rates, the side effect is that it also encourages more people than necessary to lock into higher fixed rates.

If one assumes the following:

  • A well-qualified borrower
  • Deep discount rates (e.g. a Prime – 0.55% variable, a 2.89% 3-year fixed, etc.)
  • 200 basis points of rate increases spread over 2+ years
  • That the first Bank of Canada rate increase will occur late next year or early 2015

…then it’s easy to make a mathematical case for a 2- to 3-year fixed instead of a 5-year fixed.

Even a 1-year fixed or variable could be appropriate for people with decent equity and a shortamortization. (Ask a mortgage professional to analyze different term scenarios based on your personal circumstances).

In sum, we have to put the spectre of rate normalization into perspective. Some people completely discard the possibility of years of flat mortgage rates, or even eventual rate cuts. That’s a mistake.

When planning a mortgage strategy, all scenarios must be considered and weighted appropriately based on your risk tolerance. We must allow for things like the possibility that rates won’t increase in 2014. Scotiabank and Bank of America Merrill Lynch peg the first Bank of Canada hike in 2016. If you simulated that scenario, 5- to 10-year fixed mortgages would get roundly trounced by most short-term rate strategies.

Experts have been warning for years now that rates are well below “normal.” If it turns out that rates are not so far from normal as we thought, billions of needless dollars will be spent on long-term mortgages. If you’re a financially strong borrower, you might try to avoid being part of that statistic.

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.

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Vancouver Mortgage BrokerHave you ever had a sick feeling in your stomach after buying a car, or a big screen TV, or a boat, or expensive jewelry? It’s that nagging worry that you’ve bought the wrong model or spent more than you should have.

Buyer’s remorse is common with big ticket purchases, but it’s not as common right after you close a mortgage.

With mortgages, the buyer’s remorse comes later—when you discover the cost of changing your mortgage, or realize that you have no objective source of advice to rely on.

There are numerous ways to weed out inferior mortgages, and (believe me) there are countless inferior mortgages out there. Once you’ve scouted out the best rates, it’s time to start asking questions. Here’s what you’ll want to know:

The Ultimate Mortgage Checklist

To cover all the bases, click this link above, print out the PDF and run through it point-by-point with your mortgage advisor. If they don’t want to answer these questions (or can’t answer them) seek out another mortgage professional.

This checklist covers a lot of mortgage criteria, but it’s not exhaustive and there are exceptions. And keep in mind, it applies mainly to well-qualified borrowers mortgaging their primary residence.

It’s also a living document that will be updated periodically. So if you have other helpful tips on what makes for a great mortgage, let us know and we’ll add them to the list.

Hopefully you find the list useful. Happy mortgaging!

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.


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A money pit on wheels: The real cost of owning a car

Vancouver Mortgage BrokerCars are a problem in personal finance, but they’ve been getting a free ride.

The surge in home sales in recent years and its impact on family finances has received non-stop attention in the past couple of years. But a similar jump in car sales has mostly been treated as a business story about rising fortunes in the country’s most important manufacturing sector.

Cars are a voracious wealth destroyer – they burn both gas and money. Behind houses, they’re a top contributor to today’s high personal debt levels and inadequate saving. Thinking of jumping into what is expected to be a record year of new car buying in Canada? Back up for just a moment and reconsider.

Of course, houses are a bigger financial strain than cars. The average house price in Canada was $385,906 in September, while new cars averaged $26,755 last year. But houses are at least an appreciating asset. If you buy today, you can reasonably expect to see your home post average annual price increases at the inflation rate over the next 10 to 15 years. Cars bought today will have marginal value a decade from now compared to the purchase price.

In our rush-rush world, most families need a car or two. But there’s reason to wonder if we’re doing more car buying than is good for us.

Even General Motors of Canada president Kevin Williams is concerned about this. My colleague Greg Keenan reported him telling The Globe and Mail editorial board earlier this month that auto sales are higher than economic indicators suggest they should be.

For Mr. Williams, the issue is the sustainability of today’s high sales rates. For buyers, it’s the risk to the health of their day-to-day finances.

The length of car loans today is a particular problem. I’ve financed plenty of new vehicles over the years and never gone more than five years in term. Today, data from J.D. Power & Associates shows almost two-thirds of car buyers are financing their purchases over six to eight years.

Long-term loans keep your payments low, but they make never-ending car debt a distinct possibility. As soon as your car is paid off, you could well be looking for a new vehicle to suit your evolving needs. Some people even sell their car before their six- to eight-year loan is paid off and add the remaining principal to the cost of their next vehicle.

Judging the cost of car ownership by the amount of your monthly loan payments provides the same incomplete picture you get when assessing home affordability by looking just at mortgage payments. Among the extra costs for cars are insurance, which in my experience goes up every year well beyond the inflation rate, as well as licensing costs, maintenance and fuel. Parking is another expense, especially if you commute every day.

As with houses, cars have two ways of destabilizing your finances. One, the cost of ownership uses cash that might otherwise go toward savings. Two, you run the risk that your payments will rise as interest rates move higher and squeeze your cash flow even harder. Some car loans have a fixed rate, but others have a floating rate that will edge up once the Bank of Canada decides to stop holding borrowing costs at today’s historically low levels.

What we need are some guidelines for car affordability, just as we have for houses. Suggestion: All household car payments plus insurance should not eat up more than 6 per cent of gross household income. We can discuss this guideline further on my Facebook personal finance community. But for most families, it means they’ll be able to carry one car payment at a time. Financing two vehicles will be too costly.

Since we bought our first house about 20 years ago, my wife and I have worked on the principle of having one older car and one newer one. My personal guideline is to never spend more than $400 a month on car payments, which means either saving a big down payment for a new vehicle, or looking at less expensive vehicles.

Cars are part of our lifestyle, and a pillar of our economy. Most of us will own many in our lifetimes. But as with houses, there are affordability limits that many people seem to be ignoring right now. It’s time to stop giving cars a free ride.

For more personal finance coverage, follow Rob Carrick on Twitter (@rcarrick) and Facebook (robcarrickfinance).


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OTTAWA — There has been a sea change at the Bank of Canada.

Vancouver Mortgage BrokerNo longer are policymakers setting a specific monetary course for interest rates. Instead, for the first time in 18 months, they have dropped any reference to borrowing costs eventually rising — adopting a neutral position and waiting to see which way economic winds blow.

What hasn’t changed, however, is the central bank’s biggest policy lever — its benchmark lending rate, which has remained at a near-record low of 1% since September 2010 and which has been locked in by lower-for-longer inflation and weaker-than-forecast growth.

Those policymakers — now under the leadership of Stephen Poloz, who replaced Mark Carney in June — on Wednesday kept their key rate as is, and where it will likely remain until mid- or late 2015.

They also downgraded growth estimates for Canada, despite some positive economic signs coming out of Europe and Asia, tempered by ongoing uncertainty over budget crises in the United States.

Any rate change will be “very clearly later than we thought,” Mr. Poloz, 58, told reporters in Ottawa.

But the bank governor would not comment on what direction — up or down — rates will eventually take. Instead, Mr. Poloz said the process of balancing future data will be not a matter of “engineering” but “ risk-management.”

Canada’s economy is forecast to grow by 1.6% this year, down from the bank’s July outlook of 1.8%. For 2014, the estimate has fallen to 2.5% from 2.8% ahead of 3% in 2014, unchanged from July.

Global growth, however, is expected to remain stable at 2.8% this year, but advance at a weaker pace in 2014 — 3.4% compared to the earlier estimate of 3.5% — and also slower in 2015 — 3.6% rather than 3.7%.

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ROBERT MCLISTER – Special to The Globe and Mail

Vancouver Mortgage BrokerThese questions will help you snare the most feature-rich mortgage possible, at a rate that’s better than average

The lowest possible rate is how many define a good mortgage. But that’s like judging the “best car” by the one with the lowest monthly payment.

Anyone who’s had to cough up a mortgage penalty or deal with refinance limitations can vouch for one thing: Mortgage restrictions can easily outweigh small (e.g., 0.10 to 0.15 percentage point) differences in interest rates.

It’s tough to predict your refinance needs three or four years out. Statistics show that well over half of Canadians with a mortgage renegotiate before their term is up. And the average five-year borrower changes their mortgage every three-and-a-half years.

That’s why it often pays to trade a slightly lower rate for more flexibility, unless you know you won’t change your mortgage during its term. A cheap rate can certainly save hundreds of dollars up front. Just be sure it doesn’t cost thousands after closing.

On that note, here’s a list of questions to ask your mortgage expert of choice. Check the boxes one by one as you talk with your adviser. With a little effort, this list will help you snare the most feature-rich mortgage possible, at a rate that’s better than average.

Download the PDF version of this checklist.

Here’s what you need to consider Click to see more

The Rate

1. Is the rate you’re quoting me the lowest I can possibly get, given my qualifications and mortgage preferences?

2. If I find a lower rate for a similar product elsewhere, will you match it?

3. How many other lenders did you check when shopping around my mortgage? Which major banks and credit unions did you not check?

  • These questions apply to brokers because bankers and credit union reps generally don’t shop around for you.
  • RateSpy.com is a tool I created to help mortgage shoppers benchmark the competitiveness of their rate. If you’re within 0.10 per cent to 0.15 per cent of the lowest rates on this site (for the term you’ve selected), you’re in good shape. Just be sure to compare apples to apples because the cheapest rates are often for no frills mortgages with potentially costly restrictions.

4. How long will the lender hold my rate, once I apply?

  • The best rates often come with only 30-45 day rate hold periods (aka. “quick close rates”).

5. If I get approved and rates drop, how will I know? Will the lender automatically adjust my rate lower? Will I get the lender’s very best promotional rates if its rates fall?

6. Can I get a pre-approval at this rate?

  • Pre-approvals often come with rate premiums.

7. Do you offer fully discounted rates up front at renewal? Or do you send me an inflated rate in a renewal letter and hope I sign it?


Extra Payments

8. How much extra can I prepay each year without penalty?

  • Standard “closed” mortgages offer annual “lump-sum” prepayment options ranging from 10 to 30 per cent of the original mortgage amount.
  • Don’t pay for more prepayments than you need (only 18 per cent of Canadians use lump-sum prepayments in any given year). But, just as importantly, don’t underestimate the prepayment options you’ll need. Prepayment flexibility can help you reduce a mortgage penalty, or it can save you interest in the event of a cash windfall.

9. When can I make these prepayments?

The best lenders allow you to make prepayments any time during the year, in multiple instalments.

10. How much can I increase my ongoing payments each year?

Most mortgages let you increase your ongoing payments by 15 to 20 per cent each year. Some go up to 100 per cent and/or offer double-up payments.

11. What payment frequencies do you have?

  • Examples include monthly, bi-weekly, weekly, and semi-monthly.
  • Accelerated payments (like “accelerated bi-weekly”) are the equivalent of making one extra monthly payment per year. RBC Mortgage Specialist Jennifer Bissonnette notes: “A 25 year amortization can be reduced to 22 years simply choosing accelerated bi-weekly payments instead of monthly.” Being mortgage-free three years sooner will cost you just $59 more every two weeks, she adds. That’s on a $300,000 mortgage at 3.69 per cent with a 25-year amortization.


12. Can I break my mortgage any time I want?

  • Most lenders let you pay a penalty and get out of a closed mortgage early. Some no-frills lenders only let you out if you sell your property. Some don’t let you discharge your mortgage at all, until the term is up.
  • You’ll almost always pay a rate premium for an “open” mortgage with no penalties. If you plan to keep the mortgage for more than six months, you’re often better off choosing a lower rate and paying the penalty to get out early (if needed).

13. If a mortgage penalty applies, how do you calculate it?

  • Fixed rate penalties are usually three months of interest or theinterest rate differential (IRD), whichever is more. Variable-rate penalties are typically three months of interest based on your current rate.
  • Penalty calculations based on posted rates (i.e. rates higher than the rate you actually pay) can sometimes be several thousand dollars more expensive. This method is common at most large banks, and is their single greatest weakness. If you want to compare penalties, try some sample calculations using each lender’s online penalty calculator.
  • Some lenders get tricky. For example, instead of a standard three-month interest penalty based on your current rate, some lenders charge three-month interest penalties based on posted rates. Others charge interest rate differential penalties when three-month interest charges normally apply. A few even ding you with 12-month interest penalties or penalties equal to three per cent of your balance. Avoid such mortgages unless the rate savings is significant.

14. Can I port my mortgage to a new property to avoid penalties?

  • Don’t underestimate your odds of moving. Look for good porting flexibility, especially if you’re young, need job mobility and/or have a growing family.
  • Some lenders let you port, but not increase. That forces you to pay a penalty if you buy a pricier house and need more financing.
  • Note that credit unions typically prevent porting across provincial lines–a problem if you move out of province.
  • If you have a line of credit attached to your mortgage, make sure you can easily port it as well and keep your rate.

15. How long do you give me to port my mortgage?

  • The longer the better. At least 60 days is preferable. Some lenders make you close your old property and new property on the same day, which can be unrealistic.

16. Do you deduct interest from my penalty rebate if I port my mortgage and my old and new house don’t close on the same day?

17. If I break the mortgage early, can I use my unused prepayment privileges to lower the penalty?

  • Some lenders restrict you from using your prepayment options for this purpose, if you do so within 30 days of discharging the mortgage. Some lenders, like RBC, automatically apply unused prepayment privileges to lower your penalty when refinancing–a cost-saving feature.

18. If the mortgage includes cash back, how much of that cash do I have to repay if I break the mortgage early?

  • Usually it’s a pro-rated amount but some lenders make you repay 100 per cent of the cash back, even if you break the mortgage one day early.
  • Have your mortgage adviser calculate your “effective rate,” including the cash back. That tells you how much of a rate premium you’re paying for the cash.


19. Is there any restriction on when I can refinance?

20. Can I increase my mortgage at any time, at fully discounted rates, and without paying any penalty?

  • This is vital if you need to refinance or buy a more expensive home.
  • Some lenders have a policy of charging penalties, or not giving you the best rates when you increase your mortgage.

21. Can I extend my mortgage term at any time without penalty, and at fully discounted rates?

  • This is useful if rates drop and you want to blend your rate with the new lower rate (which lowers your payment). It’s also key if you’re past the middle of your term and you want to mitigate the risk of higher rates at renewal.
  • Beware of lenders that let you “blend and extend” but then bake a prepayment charge into your new mortgage rate.

22. Is your mortgage readvanceable?

  • Readvanceable mortgages let people with at least 20 per cent equity re-borrow principal that they’ve previously paid off. This feature usually involves a credit line linked to your mortgage. Readvanceables are good low-cost sources of funds for investment opportunities, a small business, renovations and so on. Readvanceables also let you pre-pay your mortgage without the fear of not having cash on hand in an emergency. Some people even use them as an alternative to a contingency fund.
  • There are two types of readvanceables: manual (where you must apply to re-borrow paid-down principal) or automatic (where every principal payment is instantly available to you if you need it).

23. Can I roll in my refinance or switch costs to the new mortgage?


Variable-rate Mortgages

24. Does your variable rate mortgage have any restrictions?

  • Some variable-rate mortgages prevent you from porting or blending your rate, prevent increases and have fewer prepayment privileges.

25. Can I fix my payment so that it doesn’t move if rates increase?

  • If so, and rates rise, more of your payment goes to interest. If rates fall, less of your payment goes to interest. Note that most fixed payment variable mortgages have “trigger rates.” If prime rate increases so much that it exceeds the trigger rate, the lender will boost your “fixed payment.”

26. How fast does the lender increase rates when prime rate rises?

  • Some lenders, like ING, adjust their variable rates every three months, which keeps your rate lower longer. (This delay works against you if rates drop)
  • A few lenders offer capped-rate variables with a ceiling on how high your rate can go. These are usually a bad deal if you do the math.

27. Can I convert my variable rate to any of the lender’s fixed rates, at any time?

  • Remember, you’ll rarely get the best fixed rate when you convert. Moreover, it’s impossible to successfully time interest rates over the long run. For those reasons, do not go variable to save money in the short run, hoping to lock in “at the right time.” Variables are a long-term strategy.

28. If I convert my variable rate to a fixed rate, will I get the absolute lowest rate the lender offers for that term?

  • Typically you won’t. Lenders know you’d have to break your mortgage and pay a penalty. Most use that as leverage to offer merely average rates on conversions.


Other Features

29. Can I split the mortgage into different parts?

  • “Hybrid mortgages,” as they’re called, let you lock part of your mortgage into a fixed rate, or various fixed rate components, while the other parts may float at a variable rate. The purpose is to diversify your rate risk.
  • If you pick a mortgage with both long and short terms, remember that the lender may not offer you the best rates on the renewal of your shorter term. It knows you’d have to pay a penalty to get out of your longer term, making you less rate sensitive.

30. Can you offer the amortization I want?

  • Some lenders have minimum amortizations (like 18 years) while a handful of others still offer amortizations up to 35 years (assuming you have 20 per cent-plus equity).

31. Does the lender let me check my balance and remaining amortization online? Make prepayments online?

  • Major banks and large non-bank lenders (like First National, Street Capital and the big credit unions) usually have the best online access.

32. Is the lender a bank or credit union with branches?

  • Nowadays you can fully service your mortgage online or by phone, but some people still like a branch presence.
  • Almost all lenders link to your chequing account to automatically withdraw mortgage payments and make prepayments. So it’s no longer inconvenient to separate your mortgage and banking.
  • There are over 300 mortgage lenders in Canada. Don’t fear small lenders that you’ve never heard of.

33. Do you offer early renewals at your best discounted rates with no fees or penalties?

  • A 120 to 180 day early renewal can potentially reduce your rate risk. But beware of lenders that try to create false urgency and lock you into a “limited time” offer well before your renewal date.

34. Do you offer an all-in-one style mortgage where I can combine chequing, savings and my mortgage into one account?

  • Doing this can save interest as your spare cash lowers your mortgage balance, thus reducing the amount used to calculate your interest.

35. If I sell my house, can the buyer assume my mortgage?

36. If I get a one-year fixed, can it be converted to any of the lender’s fixed rates, at any time?

  • Only a handful of lenders offer this option, which gives you variable-rate type features without committing to a long term.

37. Can I skip a payment if needed? If so, how often and under what circumstances?

  • “Payment vacations” can be handy in emergencies. But some lenders require that you make an equivalent pre-payment first. Remember that skipped payments aren’t free. You still have to make all payments eventually, and interest accrues in the meantime.

38. Do you pay profit sharing on my mortgage?

  • Available only at credit unions who rebate a small portion of your interest paid. You can access these funds only after a vesting period, which can last 3-7 years or more.

39. What default insurer will insure my mortgage?

  • Default insurance generally applies if you have less than 20 per cent equity. When you switch lenders with an insured mortgage, you must ensure that the new lender accepts that insurer’s mortgages. CMHC and Genworth allow you the most flexibility when switching lenders.

40. If I purchase creditor life insurance through you, can I port that insurance to a new lender without having to requalify and lose the premium I’m paying on my current mortgage amount?

  • Insurance premiums go up as you age, so you want insurance that’s not tied to one lender. That way, you can keep your premiums as-is on your original mortgage amount, even if you change lenders.
  • If you don’t have portable creditor life insurance and get sick, your pre-existing condition may not be covered by the new lender’s insurer.


Extra Costs

41. Will you pay my appraisal fee?

  • Appraisal fees are usually $225 to $325, but can be significantly more based on location and property-type. There is usually no appraisal cost if your mortgage is insured.

42. Do you have any processing fees?

43. Do you have any cancellation fees?

44. How is the mortgage compounded?

  • Semi-annual compounding costs you less than monthly compounding.

45. Do you charge “reinvestment fees” on top of the penalty if I break my mortgage early?

46. Do I have to pay legal (aka. mortgage registration) fees?

  • Most lenders cover this cost on switches where the loan amount, loan-to-value and amortization are not increasing.
  • A few even pay legal fees on refinances, but the rate is often higher than you can get elsewhere.

47. Is the mortgage a “collateral charge” mortgage?

  • Collateral charges help you avoid paying legal fees to refinance with your lender. But they also make it potentially more expensive to switch institutions at maturity. The reason: most lenders only pay switch fees on “standard charges,” not collateral charges.
  • Some collateral charge lenders register your mortgage for 100 to 125 per cent of your property value. That lets you borrow more if your property value rises. The tradeoff: It prevents you from securing anything else against your property, like a second mortgage.

48. If I switch my mortgage to you, will you pay my old lender’s discharge fee?

  • Very few lenders do this, but it can’t hurt to ask.

49. Do I have to pay title insurance if I switch my mortgage to you?

  • The answer is commonly yes, but some lenders don’t require title insurance, or they will pay it for you. It can be $150 to $300 or more.

50. Will I pay a higher rate if I’m self-employed and cannot prove my income in the traditional manner?

51. Does the mortgage come with free banking or significant discounts on other financial products?

  • Unlike days gone by, you no longer need to bundle financial products to get the market’s best mortgage rates. Nor do you need a “special relationship” with your banker. Simply shopping around and negotiating will get you the same mortgage discounts 99 per cent of the time.

52. If I switch lenders and have a mortgage and line of credit, will the lender charge me a separate discharge fee on both the mortgage and line of credit?

53. If I need bridge financing to cover the gap between the purchase of my new home and the sale of my old home, what rate and fees will you charge?

  • Also ask how long the bridge lasts. 30 days is typical.

54. Will I pay an extra fee if I break my open mortgage within 12 months?



55. If I have a problem with my mortgage, who do I call?

  • Large mortgage providers like banks often have live chat or 24-hour telephone support, all tracked and recorded in case you have a problem later.
  • Large lenders also have systems that enable multiple agents to work on your file. This yields faster service if your main contact is unavailable.

56. Will I get a dedicated mortgage adviser, or talk to someone different each time I have a mortgage question?

  • You should always have the email address and direct number of your primary mortgage contact.

57. How long do I have to wait on hold to speak to my mortgage adviser? What are his/her hours?

58. Will my mortgage adviser contact me annually for a mortgage check-up?

  • This service ensures that your rate is still competitive and that your mortgage type still makes sense for your changing needs.



59. What are your qualifications as a mortgage adviser?

  • How long have you been a mortgage adviser? (The more experience, the less chance for costly mistakes. Look for two years minimum experience.)
  • Do you specialize in mortgages or are you a generalist who sells many financial products but is a master of none?
  • Have you closed over $10-million of financing in the last 12 months? (That’s a minimum rule of thumb for professional mortgage advisers.)
  • Are you the right mortgage adviser for me? (Read this)

60. Given my lifestyle and savings, will you be honest with me about whether I can truly afford this mortgage?

  • Just because a lender approves you doesn’t mean you can safely afford the payments. Moreover, alternative down payment options may not be worth the trade-offs.

61. What methods will you use to help me pick the right term?

  • Proper term selection saves you way more than small rate differences, almost every time. Find an adviser that does more than glibly quote industry research or ask if you can “sleep at night” with a variable rate. At a minimum, your adviser should compare the estimated interest cost of various terms, given sample rate increases over the next five years.

62. Will you help me stress test my mortgage?

  • Be sure you can afford your mortgage if rates jump 2 to 3 per cent.

63. What mortgage strategies will you provide to help me retire faster?

  • Your mortgage can be used as a key financial planning tool to accelerate your savings, create future equity and build your investment portfolio.

Note: This checklist assumes you’re a qualified borrower who’s getting a mortgage on his/her primary residence, with provable income and decent credit. If this doesn’t reflect your scenario, other important questions will apply.

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.

Boomers discover they’ve been locked out of condo boom – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Buyers looking to ‘downgrade their homes and upgrade their lifestyle’.

By:  Business Reporter, Published on Fri Sep 20 2013

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Andy Macaulay and Anne Sutherland are getting ready to put their Riverdale home on sale.

It took baby boomers Anne Sutherland and Andy Macaulay many frustrating years of “trying to tick off all the boxes” until they finally found a place they could call home among Toronto’s towering condos.

Come November, the couple will downsize from their 2,500-square-foot Riverdale house to an $800,000 condo that you might say was almost custom-made for boomers in a city exploding with shoeboxes in the sky.

It’s a 1,271-square-foot unit, spread over two levels, in one of the most coveted downtown neighbourhoods in the city, the St. Lawrence Market area.

The Berczy doesn’t have a basketball court or a costly swimming pool. The concierge desk is only manned eight hours a day because that’s more affordable for owners.

And almost all the units in this 12-storey boutique building have been bought by folks who actually plan to live there, rather than investors looking to rent them out.

That’s because Vancouver-based Concert Real Estate Corp. carefully targeted sales to buyers in their 30s to 60s who were willing to pay the price for bigger units and a community of committed condo owners, rather than to transient renters.

“It ticked off all the boxes” and felt the most like a house of any condo the couple saw, says Sutherland, who spent three years touring church conversions, visiting new condo sales centres and scouring MLS for older condos that afforded a bit of privacy and would allow anything bigger than “a snack dog.”

The couple — and their beloved golden retriever, Finn — quickly discovered what’s coming as a huge shock to many baby boomers now looking to “downgrade their homes and upgrade their lifestyle,” in the words of one realtor.

The giant demographic group has been largely locked out of Toronto’s condo boom.

“We were really surprised by the lack of options,” says Sutherland. “When you are used to living in a house, and you are able to work from home, you want to have doors that close and some level of privacy.”

Condo realtor Roy Bhandari has been hearing those same complaints a lot lately in the face of what he says has been a recent surge of boomers looking to move from the suburbs to the city.

“They’re telling us that living in a 4,000-square-foot home is not a lot of fun — that it feels more empty, the larger it is, now that the kids are gone.

“They’ve seen how much the city has grown and most of them want to be close to the water or central enough that they can walk everywhere.”

But what they’re finding, especially among newer projects, is condos averaging just 739 square feet. That’s 100 square feet less than five years ago, when new units averaged 839 square feet, says market research firm Urbanation.

Those largely highrise units may work for boomers looking for what Bhandari calls “urban cottages”. A contingent of boomers plans to keep their big homes, cottages or farmhouses as family gathering places and are just looking for small suites where they can spend weekends, close to great restaurants and theatres.

But the other group of boomers Bhandari is now seeing are proving to be the much bigger challenge. They’re looking to trade their oversized houses in Orangeville or Oakville for units of 1,500 square feet or more.

They are shocked to discover how little is out there and that they will have to pay almost as much as they hope to get for their houses, but for half the space or less.

Most get over the initial sticker shock for a chance to be close to the action, says Bhandari.

This is a crowd that’s not keen to wait three to five years for their condo to be built. They want it to be move-in-ready within 18 months — the time they need to pack up decades of memories, pawn off furniture on friends and family and get their heads around one of the biggest moves of their lives.

Sutherland and Macaulay are a bit of an exception.

They bought from blueprints three years ago, but largely because they loved the bigger units in The Berczy.

“The word ‘freedom’ was at the top of our list,” says Macaulay, an advertising executive and, like his wife, a strategic planner. “We love to travel and we’re looking forward to just being able to lock the door and go.”

Even Concert’s director of project sales, Catherine Diraison, acknowledges it’s really tough for developers to cater to the boomer market in Toronto, given land prices that have skyrocketed the last few years.

Concert has one important advantage with its first two projects here, The Berczy and now 88 Scott. Its projects are backed by major pension funds rather than banks, which require that 70 per cent of units be sold before developers can get financing to start construction.

By targeting investors rather than so-called end users, developers can get to the 70 per cent threshold much quicker and get projects underway. But that means many projects, especially close to transit and downtown amenities, can be anywhere from 30 to 90 per cent investor-owned, with smaller units aimed specifically at renters, making them more apartment buildings than condo communities.

Like most boomers, Sutherland and Macaulay were looking for a smaller building with the sense of community they’ve grown used to in a house.

This week, the couple put their three-storey Logan Ave. home on the market for $1.5 million. Sutherland insisted on going away so she didn’t have to watch the stagers remake the gracious old home where she and Macaulay raised their son over two decades.

Sutherland’s excited about the future, except for the notion of being dependant on an elevator for the first time since her 20s.

And just one thing keeps Macaulay up at night: Wondering what the view of the downtown will look like the first time they walk into their new home.

Things keep getting smaller

Just when you thought Toronto condos couldn’t get any smaller, developers Urban Capital and Malibu have announced what they are touting as Toronto’s first “micro condos.”

The 300-square-feet-and-up, fully furnished suites are planned for a new 25-storey building, Smart House, at the corner of Queen St. W. and University Ave. They are slated to start at $249,000 and will go on sale in October.

Furniture in the 241 suites will do space-saving double duty: Beds, for instance, will fold into the wall and convert in a sofa.

But the project has a long way to rival the real micro-condos of the world, such as those in Tokyo, where folks live in “capsules” as tiny as 96 square feet.

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Viewing Properties as a Single Woman

Vancouver Mortgage BrokerWomen are no longer waiting for Mr. Right before they consider buying a home or condo as many single women value their single independence and have careers that pay top dollar. Real estate is a good investment right now and interest rates are still a good bargain.

Women actually make up as much as 20 % of prospective new home buyers today, but if you don’t know much about real estate investment than you might be wondering about what approach you should take when you first start viewing prospective properties.

Here are a few tips about what you should keep in mind when viewing a prospective property once you’ve got your mortgage pre-approved and your finances set up for the buy.

Get a Good Realtor

Male or female buyers are best advised not to view a home by themselves. You can save a lot of valuable time by using an experienced realtor who knows the market especially in the neighbourhoods where you want to buy.

A good realtor will take the time to understand your needs, the neighbourhood and the price range. They can explain all the main features and advantages about the home and disclose any negative qualities that are readily visible.

Don’t just pick any realtor out of the yellow pages, do some research and prepare some questions to ask them before you ask them to represent you.

What’s Your First Impression?

This is called curb appeal. It’s your first impression of the home or condo. What you want to get from your first view of the outside is get an idea of how well the home has been maintained.

Make sure you take some time and give the outside as much of a going over as you do with the inside. If the paint is peeling, and the caulking around the windows is missing or the rain gutter is sagging then you might want to consider these negative first impressions as a possible red flag.

And always ask about the age and state of the roof.

Key Things to Look For When Viewing a Home

Even though you plan to hire a home inspector to give the house a thorough going over, there are a few things to look for when you are viewing the inside of the house. These are issues that stand out and you should not be shy about asking questions if you see something that troubles you or gives you concern.

The Basement

Take note of any musty smell, areas of discolouration, cracks on the basement floors and walls. Basement walls which have cracks or bulging might suggest foundation problems. Look for any signs of mildew, or seepage around basement windows.

Also, check and ask about the age of the furnace and water heater and visually observe them as best you can. Rusty pipes, smells or excessive noises can suggest potential problems.

Interior of the House

Eyeball every room from the ceiling to the floor. You can observe whether there are any signs of leaks or stains, or feel for draughts around the windows. Check out the state of the carpet/wood floors and also whether the walls need painting or note if the drywall or plastering is cracked or dinged.

In the kitchen and bathroom you want to note the state and age of the fixtures, faucets, plumbing and overall quality. Look for dated plumbing such as faucets and the state of the sinks, and look for stains or mildew on the floors.

If there is an attic and it’s accessible than take the time and take a look as that can give you an idea of the insulation quality and whether there are signs of leaks.

Consider security issues as you go through the home. Ask about crime in the area as some neighbourhoods are safer than others. Will you have to change doors, add new deadbolts, window locks or even have to get a security system?

And, most importantly, take the time to find yourself an experienced and well established home inspector.

Personal Finance: Banks’ sales pitches can cost you money: Consult with Bruce Coleman, Vancouver Mortgage Broker

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With lower demand for classic credit cards, expect more sales pitches from the banks as they try to shore up their profits.

By:  On Your Side, Published on Sun Oct 20 2013

David Bourque called TD Canada Trust about a credit card issue. At the end of the call, he was given a sales pitch to buy insurance to protect his balance if he became sick or lost his job.
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David Bourque called TD Canada Trust about a credit card issue and was given a sales pitch to buy insurance to protect his balance if he became sick or lost his job.

“I was told there would be no fees charged if I paid off the balance in full,” he says. “I pay off my balance in full every month. I signed up.”

Two months later, he was going over his Visa bills and found two charges for balance protection insurance. He called TD Canada Trust and made a successful appeal to get them reversed.

“I would not have agreed to buy the product if it were not ‘free,’ since it had little benefit for me. I am retired and I have critical illness insurance through my broker,” he says.

“It was a safety valve, a free one, and I figured why not. Big mistake.”

Balance protection insurance is a profit centre for the banks. They find it an easy sell because Canadians are risk averse and worry about paying their credit card bills in a crisis. Most banks charge you for insurance only when you carry a balance from the previous month. But a few, such as TD, charge fees each month.

TD spokeswoman Huma Pabani said customers are told over the phone that the insurance premiums are based on the average daily balance. After verbally agreeing, a customer gets a letter and certificate of insurance in the mail, showing how premiums are calculated.

“While I’m glad to get a refund of $40 or so, the issue was the false pretense under which the sale was made in the first place — no balance, no premium,” Bourque responded.

“I reached someone who told me I was misinformed about the ‘fee-free’ coverage and there was always a premium charge if you used the card. He said others had called in as well, saying the same thing.”

Household credit is rising at a slow pace, reflecting continued softness in the credit card market.

“Overall growth in card balances is now marginally in negative territory,” said Benjamin Tal, an economist at CIBC World Markets, in a recent report.

The trend is caused by lower demand for classic credit cards and transfers of balances to lower-cost lines of credit.

Welcome to the Big Sell. Expect to see more sales pitches as banks fight to shore up their profits against reduced consumer debt.

When it comes to your credit card limit, banks used to raise it without asking and notify you after the fact. Now they are required to get your consent before increasing the limit.

While I like the idea of getting a client’s approval, I’m annoyed by tactics used to increase my limit on a CIBC Aerogold Infinite Visa card to $22,000 (from the existing $18,000).

The bank sent me a letter, saying I had a month to respond to its offer. Then, it flashed messages about my credit card limit when I withdrew cash from a CIBC Instant Teller machine. After the deadline, CIBC left me a voicemail message at home. I called back quickly, thinking I might have a problem, only to get another appeal to raise my credit limit.

Kevin Dove, a CIBC spokesman, said credit limit increases were offered to a small percentage of clients using a variety of channels, such as direct mail, bank machines, online banking and phone calls.

“Once you declined the limit increase offer at the bank machine, this should have stopped any further offers on this topic,” he explained.

“Unfortunately, you received a further phone call from us with the same offer. We are reviewing our systems and process to determine why this happened and make corrections to ensure it doesn’t happen again.”

In truth, I don’t remember declining the offer at the bank machine. I’d hoped that ignoring the solicitations would be enough to stop them.

Doug Melville, ombudsman and chief executive at the Ombudsman for Banking Services and Investments, said higher card limits are attractive to those who collect reward points.

However, he advises not agreeing to a higher limit without considering the impact on your credit score — a key measure used by banks in giving loans.

“Credit bureaus look at the total amount you could draw down in a crisis and factor that into your credit score. That could affect your ability to get credit somewhere else when you need it,” he says.

To avoid sales pitches, you can register with the CRTC’s do-not-call list. However, companies that have an existing relationship with you are exempt from the rules.

A better solution, says Melville, is to ask your bank to put you on its internal do-not-call list. That should ensure you don’t get appeals to buy credit card balance insurance or increase your card limit.

<online_link displayname=”online_link” name=”online_link”>ENDEllen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca or www.ellenroseman.com .

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