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The rising tide of home ownership may have finally met its match – Ask Bruce Coleman, Vancouver Mortgage Broker

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Maybe there is one temptation out there to get Canadians to stop buying homes. Cheaper rent.

Vancouver Mortgage BrokerWomen the new ‘wildcard’ in the condo market

The growing number of women buying condos might be creating a paradigm shift in the industry that planners didn’t expect. Find out more

Anyone sitting on the sidelines considering whether to buy a home in Canada might want to take a look at a recent report from the International Monetary Fund.

The group says that among countries in the Organization for Economic Cooperation and Development, Canada is now the most expensive place in the world to own relative to the cost of renting.

“In many OECD countries, the ratio of house prices to rents — a typical measure of price valuation — remains above historical averages, leaving room for price corrections down the road,” said the IMF, basing its comments on second quarter statistics for 2013.

The Canada Mortgage and Housing Corp. said this week rental rates across the country continue to rise but mostly at around the rate of inflation. The Crown corporation said the rents for an average two-bedroom apartment had risen to $901 a month by October, 2012, a 2% increase from the year before.

The IMF says Canada is the most expensive place to buy in the world using its housing to rent comparison, 85% above the average.

Could the tide finally be turning on Canada’s high rate of home ownership which reached 69% of households in 2011. Only 60.3% of households owned their residences in 1971.

Benjamin Tal, deputy chief economist of CIBC World Markets Inc., said he’s not surprised to see the numbers produced by the IMF and said the shift could be towards renting now.

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“This is not a market for first-time buyers,” said Mr. Tal, noting rental rates increases have simply not kept pace with prices increases in the housing market.

Royal Bank of Canada says affordability further weakened in the third quarter, as prices began to rise along with mortgage rates. The bank said a typical Canadian bungalow requires 43.3% of household monthly pre-tax income based on mortgage payments, utilities and property taxes.

The Canadian Real Estate Association said the average existing home sold for $391,085 in October, a 9.8% increase from a year ago.

Sam Kolias, chief executive of the Boardwalk Real Estate Investment Trust, one of the largest apartment owners in the country, says there remains a cultural bias that continues to favour owning versus renting in Canada.

“Whether you are in rent controlled or not, our experience is rents over time track the consumer price index,” said Mr. Kolias, adding rising interest rates could go a long way to determining whether consumers still lean towards owning.

“Historically the gap between home ownership and renting is lower when interest rates are higher.”

Rock bottom interest rates have actually boosted home prices because they have allowed consumers to take on more debt by lowering monthly carrying costs of a mortgage.

Mr Kolias says high-ratio mortgages backed by the government, which allows consumers to buy into the market with as little as 5% down, have allowed young consumers to skip renting.

“A consumer will buy a home, even if it costs him more because they believe in the long run ownership is good because it’s a forced savings program,” he said.

But even the chief executive of Century 21 Canada, Don Lawby, said there’s no question housing prices in Canada have made renting attractive.

But, in defence of housing, he wonders whether people renting will just spend all the savings. “Rent for 20 years and what will do you with that money?” said Mr. Lawby, adding home ownership results in forced savings.

Still, he says the idea that home prices are high is really only relevant in three major markets, Toronto, Vancouver and Calgary.

But, even Mr. Lawby doesn’t think we can go much higher in home ownership penetration. “Are we going to end up at 75% to 80%? No, there is always going to be a segment of population that wants to rent.”

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More Canadians have TFSAs, but many hazy on details: study – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Most Canadians believe they are knowledgeable about tax-free savings accounts, but 89 per cent don’t know what can go in the accounts and 81 per cent are unaware of the annual contribution limit, according to a Bank of Montreal study.

Vancouver Mortgage BrokerIn fact, cash is the most commonly held asset in TFSAs, followed by mutual funds and guaranteed investment certificates, the bank said in a statement.

The study found that 48 per cent of Canadians now say they have a TFSA, more than double the 23 per cent reported in 2012. On average, they plan to contribute $3,625 to the accounts this year.

About 55 per cent of those polled in Alberta have a TFSA, with the Prairies and British Columbia at 53 per cent each. The number is smallest in Atlantic Canada, at 34 per cent.

The accounts are most often used as a way to save for retirement and as an emergency source of funds. One in ten TFSA holders have over-contributed since opening an account, the report showed. Only 11 per cent correctly identified all six types of investments that are eligible to be held within a TFSA.

Sandi Martin, a fee-only financial planner with Spring Personal Finance based in Gravenhurst, Ontario, said the nature of TFSAs as a tax designation instead of an investment type is confusing to clients. “It’s even more difficult for the average person to hear ‘Tax Free Savings Account’ and not assume that the only thing you can hold in it is cash.”

In her opinion, fixed income investments that pay interest are the best thing to hold in a TFSA because “that kind of investment income doesn’t get the same kind of tax breaks that capital gains or Canadian dividends do.”

TFSAs let Canadians earn tax-free investment income. There is no minimum contribution required to open an account and no tax on funds that are withdrawn, the bank pointed out. The federal government recently raised the 2013 annual contribution limit for a TFSA from $5,000 to $5,500.

The survey polled 1,023 adults between November 29th and December 5th with a margin of error of about 3 per cent.

Tips On Buying Vancouver Homeowner’s Insurance – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Tips On Buying Vancouver Homeowner’s Insurance

Vancouver Mortgage BrokerWhen you’re buying a new home or condo in Vancouver you’re going to need to also buy homeowner’s insurance. Many people simply contact their auto insurance agent and buy a policy without really giving it the attention it deserves.

And, unfortunately many people also don’t take the time to read through the policy to really appreciate what the policy covers, but more importantly what it doesn’t cover.

Not all insurance companies are the same and a discounted homeowner’s policy which you might find browsing the internet doesn’t mean you are necessarily going to be getting the best deal particularly if the company doesn’t have a good record for servicing claims.

Also, there are aspects of insurance coverage that some people neglect because they believe if they have a policy all their possessions will be fully covered in the event of a catastrophic loss.

There are likely plenty of folks in Calgary who were wishing they had included a “Flood Insurance Rider” after their own recent horrific experience. That nice little creek running alongside your property can take on monstrous proportions during a deluge and flash flood.

It is also important to remember that Vancouver is a not only a coastal city and could face the prospect of a tsunami, but is also situated on an earthquake fault line.

Type of Policy

Also, if you bought the wrong policy such as one which only provides ACV (Actual Cash Value) versus Replacement Cost then you could end up losing a whole of money and find yourself very underinsured in the event of a major loss.

This is a very important question to ask when buying a homeowner’s insurance policy especially as it pertains to your personal possessions.

An ACV policy means that depreciation will be applied to each and every possession so you will not receive full value unless it was something you just purchased. A flat screen T.V. which you bought 5 years ago may have as much as a 50% depreciated mark down on the amount which could be reimbursed.

Replacement Cost on the other hand is a more expensive policy but when it comes to replacing everything you own is the smarter buy because you even though that same T.V. described above is 5 years old, you would get the equivalent cash value of what it would cost to replace your set with an equivalent type model.

Another reason to read the policy is that certain types of events such as flooding or earthquakes may be excluded in the standard policy. If you want to protect your home and possessions from damage from these types of events you will be required to buy separate policies.

Other Facts about Personal Possessions

Your personal possessions are not covered in their entirety. Some more valuable possessions such as artwork, collectibles, furs and other items will only be covered to a specified percentage or dollar amount. To ensure that you cover these valuable items to their full value you will be required to buy separate “insurance riders.” In most instances, you will need these items appraised before the rider is issued.

You may also need separate riders for other personal possessions such as a boat, and R.V. or A.T.V. and other items as they may be excluded or only afforded very nominal coverage.

Do You Have Enough Insurance?

Many policies cover only the structure and/or your possessions. They may not cover the land itself. Instead of getting insurance just for the home, you want to consider increasing the amount of coverage to also cover the land. You also need to review the policy for unattached structures to ensure they are also covered.

Another point to remember is to review you policy every couple of years. Properties and homes appreciate in value but your insurance coverage has to be increased by you because it will not be done so automatically.

Money Saving Tips

There are two ways that you can save money on your homeowner’s policy. The first is by increasing your deductible. The deductible is the mount you will be responsible to absorb when you make a claim.

If you are submitting a claim on your home destroyed in a fire worth $500,000 with a comparable policy coverage amount and have a $1,000 deductible, then you would receive payment less the deductible. The higher the deductible – the cheaper the cost of the policy.

The second way to save money is through bundling. Most insurers will provide discounts if your bundle some of your insurance coverage under the one insurer such as your auto insurance combined with your homeowner’s. Always ask you agent about any discounts offered by the insurance company.

 

Insulating Your Vancouver Home- Consult with Bruce Coleman, Vancouver Mortgage Broker

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Insulating Your Vancouver Home

Vancouver Mortgage BrokerIf you’ve bought an older Vancouver home and found it to be somewhat drafty or chilly then it might be time to consider some new insulation. Insulation not only helps to keep the home warmer in the winter months but can also keep it cooler in those hotter humid summer months.

Some indications that your home is not properly insulated in winter months include cold walls or floors, expensive heating bills, indications of mould and uneven heat throughout the home. In summer, some of the signs of inadequate insulation include uncomfortable heat levels, inadequacy of air conditioning and mould growing in the basement.

There are many different types of insulation available these days, and some types of insulation are more suitable for different parts of the home.

Ideally, the shell of the home should have 3 separate components when it comes to insulation. The exterior should have an air barrier underneath the siding or brick. The interior of the home should have insulation within the wall studs of the framework which should be covered with a third lawyer which is actually a vapour barrier to keep moisture at bay.

How Insulation is Rated

The effectiveness of insulation is rated by the “R” value or in metric terms the “RSI” value. The R refers to the insulation’s resistance ability to resist the movement of heat. The higher the R or RSI value – the higher the resistance factor.

Most provincial building codes have a minimal R value assigned to how insulation is used in varying applications, and most particularly refer to new construction, and will provide you with a good guide for how to use insulation effectively to insulate older homes.

Types of Insulation

Here is a basic guide of the types of insulation that are available for use:

Batt Type Insulation

Batt insulation comes in the form of bales which are wrapped and generally shaped to fit perfectly in between the wall studs and include:

  • Fibreglass – Very commonly used for wall studs
  • Mineral Wool – Has slightly better resistance to fire and sound proofing capabilities
  • Cotton – Not very common

Loose Fill Insulation

The types of loose fill insulation should generally be applied using a professional installer. The types of loose fill insulation include:

  • Fibreglass – pink or yellow in colour and perhaps not the best for attics as it can be affected by air movement
  • Mineral Fibre – considered very light
  • Cellulose Fibre – Grey in colour but is best applied by an experienced installer

Board Stock Insulation

There are a variety of types and include the following:

  • Types I and II – usually comprised of polystyrene or EPS. Very thin and has foam beads pressed together and must be covered.
  • Types III and IV – Also made of polystyrene or XPS. A suitable choice for moist of humid climates as can act as vapour barrier and must also be covered.
  • Rigid Fibreglass and Rigid Mineral Fibre– Less rigid than polystyrene and has good drainage capability
  • Polyisocyanurate – Is a rigid foam that is foil-faced

Applied Sprays

Sprays may have a number of potential health risks when being applied so it is vital that you closely follow the manufacturer’s requirements for using safety and protective equipment. Ideally, this type of insulation should be applied by a professional installer. The types of spray insulation materials include:

  • Wet Spray Cellulose – Consist of a very fine particles which are held together with a binding agent
  • Open Cell Light Density Polyurethane– A soft foam of spray which expands in the cavity area and must be covered with a vapour barrier

Keep in mind that the different types of insulation described above are suitable for different areas of the home such as the attic, wall studs, floors and basement and the exterior of the building. Using the wrong insulating material in the wrong location can be very counter-productive.

Women the new ‘wildcard’ in the condo market – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Megan Vickell is a new brand of condominium owner that people predicting a market crash may have forgotten to factor in.

Vancouver Mortgage BrokerShe’s young, single and ready to buy her first home. And, more importantly, she’s female — part of a growing demographic that just might be creating a new paradigm in the housing sector.

A report from Canada Mortgage and Housing Corp. shows women are a growing powerhouse in the Canadian condominium market. Among people who live alone, women made up 65% of owner occupants in 2011.

Condo owners: By the numbers

19% Percentage of condominium owners under the age of 35; 29% were seniors 65 or older.

65% Percentage of women among condo owner-occupants who live alone.

2.5 Average number of people in a household size in 2011, down from 3.5 people in 1971.

12.6% Percentage of Canadian homeowners who lived in a condo in 2011.

42% Percentage of condo owners that are one-person households

35.1% Percentage of Vancouver homeowners who live in a condo, the highest in the country.

71% Among Canadians with a mortgage, the percentage of people with more than 25% equity.

7% Percentage of people with less than 10% down.

•.31% The percentage of Canadians with a mortgage in arrears, as of June, 2013.

The female factor is even more prevalent among older women with 76% of those 55 and older living alone women. Among lone-parents, women make up 84% of condominium owners.

It’s not just one thing about condos that is pushing Ms. Vickell to look at a high-rise. The public relations manager of eBay Canada says she’s close to putting in an offer this week on a 650 square foot unit.

“When I was looking I was grumbling because a lot of the maintenance fees were so high but then I was walking down the street after a big snowfall, and all these people were snowed in,  I thought ‘for a single female, I’m willing to pay those fees’,” she says. “I don’t even know where to start with half that stuff around the house.”

There are other perks of condominium living that attracts her to the market, including the 24-hour seven-day a week concierge service. “It’s everything you need in one place. There is someone to take my packages when I’m not there, I’ve got a gym. It’s really just all about convenient living,” says Ms. Vickell.

She sees the condominium as a stepping stone to a house. “I think of it as a five-year plan,” she says.

Do early mortgage renewals save or cost you money – Ask Bruce Coleman, Vancouver Mortgage Broker

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ROBERT MCLISTER – Special to The Globe and Mail

A rate in the hand is worth two in the bush.

Vancouver Mortgage BrokerMany mortgage lenders want you to believe that rate certainty is worth paying a premium for. It is the justification, they say, for staying with them and renewing your mortgage early.

Early renewal features typically let you lock in a new rate two to four months ahead of when your mortgage is due to mature. Some lenders, like Bank of Nova Scotia, even let you renew up to six months in advance.

The question is, do early renewals save or cost home owners money?

“Unless the consumer believes that interest rates are going to move up significantly prior to their ability to lock in, I fail to see a reason to do an early renewal with their existing lender,” says mortgage broker Calum Ross.

By locking in earlier, you minimize risk of adverse rate movements. But in return, you pay a premium to the best available rates, and you’ll lose all benefit if rates drop before your term is up.

Not surprisingly, Canada’s big lenders are advocates of renewing your mortgage in advance. “We think it’s a good idea to have some room to manoeuvre [when locking in a renewal rate],” says David Stafford, Scotiabank’s managing director of real estate secured lending. Having more time to make a decision is especially important if you plan to renew with your current lender, as more than 90 per cent of customers do at Scotiabank.

Of course, the benefit of renewing early depends largely on the rate you’re offered. Right now, for example, you can find fully featured five-year fixed rates at 3.29 per cent or less. If your lender is letting you lock in 90 days early for 3.39 per cent – a mere 10 basis point premium – that’s worth considering (assuming a five-year fixed is the right term for you). This seems especially relevant today, given that fixed rates may climb if the U.S. Federal Reserve slows its bond buying (i.e. “tapers” its economic stimulus program).

On the other hand, if your lender were pitching a “one-time-only” opportunity to renew early at 3.59 per cent or more, that warrants more skepticism. A 0.30-percentage-point rate difference would tack on $3,500 of extra interest on a $250,000 five-year term. (Note: This 3.59-per-cent rate is an actual early renewal “special” currently being offered by at least one major bank.)

I use 0.30 of a percentage point in my example on purpose: That’s roughly how high today’s best fixed rates can increase until they’re equal to a good early renewal rate.

But it’s not that often that rates jump 0.30 of a percentage point in 90 days. Since the 1950s, fixed rates have risen 0.30 of a percentage point over a three-month span only 21 per cent of the time. Mind you, we experienced one such case last May to July when rates soared three-quarters of a percentage point.

Either way, if lenders can get you to commit early, they will. By law, banks have to send you a renewal notice at least 21 days before the end of your existing term. But they’ll often contact you well in advance of that, which reduces the odds of you shopping around.

Positioning early renewals as a “convenience” or risk mitigator is a strategy that frequently pays off for lenders. According to the Canadian Association of Accredited Mortgage Professionals, almost four out of 10 people who renew with the same lender do so at the original rate proposed by that lender. In other words, they don’t negotiate.

To minimize rate risk, fixed-rate borrowers should seek at least a 90- to 120-day rate hold, either at their existing lender or elsewhere. If your current lender offers to hold a decent rate for you (without making you commit right then), that’s a “no brainer,” Mr. Ross says. Having a rate hold in your back pocket limits rate risk if you choose to wait until 30 days from maturity to renew. The market’s best rates are often 30-day “quick closes.”

“It is clear to me that consumers don’t do a good job at managing this part of their personal finances,” Mr. Ross adds, and that’s certainly true. If you want a great deal on your next mortgage renewal, one that could potentially save you thousands, remember that your lender’s first offer is seldom the best offer.

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.

Former Goldman Sachs investment banker appointed to head CMHC

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canada-cmhcCanada named Evan Siddall, a former official with Goldman Sachs Group Inc., as chief executive officer of the country’s government-owned housing agency.

Siddall, who has been a special adviser to the Bank of Canada Governor for the past two years, will serve a five-year term at Canada Mortgage & Housing Corp. starting Jan. 1, the government said today in a statement.

Toronto-native Siddall holds a law degree from that city’s York University. He worked as a partner for Lazard Freres & Co. LLC and was managing director at the firm’s Canadian operations for six years, according to a biography on the Bank of Canada’s website. He has also held positions with Fort Reliance Co. and Bank of Montreal.

“I look forward to working with its dedicated staff, clients and stakeholders to ensure that Canadians continue to benefit from CMHC’s key role in providing affordable and accessible housing, as well as in promoting a strong financial system,” Siddall said in the statement.

At the central bank’s Toronto office, Siddal led projects that aimed to promote stability of the Canadian financial system.

In a Dec. 10 report, the central bank said “there is a risk of a correction in prices and construction activity” if the supply of new condo units in major cities such as Toronto isn’t absorbed. The housing market is also more vulnerable if demand has been inflated by investors who are more likely to get out of the market if it weakens, the bank said in the report.

“Mr. Siddall brings to the position extensive leadership and senior management experience,” Employment Minister Jason Kenney said in the statement. “His proven financial and capital markets expertise will be of tremendous value to CMHC.”

Bloomberg.com

Re/Max forecasts ‘exceptionally healthy’ real estate market in 2014 – Ask Bruce Coleman, Vancouver Mortgage Broker

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MISSISSAUGA, Ont. — Canada can expect an “exceptionally healthy” housing market in 2014 thanks to improvements in the overall economy that helped produce a surge in the latter half of this year, a leading real estate Vancouver Mortgage Brokergroup said Wednesday.

Can’t afford Canadian property? Downsize your home, upsize your storage locker

With the condo market in Canada growing rapidly and the square footage of each unit shrinking, is rental storage a solution for crowded living?

Re/Max says that nationally, home sales are expected to climb 2% to 475,000 units next year after a 3% increase to well over 453,000 projected for 2013 when all the numbers are in.

At the same time, the value of an average Canadian home is forecast to escalate 3% to $390,000 in 2014 after rising 4% to $380,000 in 2013, according to a survey of the group’s independent brokers and affiliates.

Meanwhile, the outlook is for the residential housing market to remain in “clear balanced territory” throughout 2014, although some pockets and price points may see continued shortages.

Re/Max says its optimism is largely based on an improved outlook for Canada next year which is expected to see the country enjoy economic growth second only to the 2.8% rate of the United States among Group of Seven countries.

And it says that while Canada’s economic growth is currently forecast at 2.3% , it could move higher given the impact of strengthening global economies on the Canadian manufacturing sector.

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“Canadian housing markets are on solid ground after a somewhat harrowing first and second quarter of 2013,” said Gurinder Sandhu, executive vice-president and regional director, RE/MAX Ontario-Atlantic Canada.

Better than expected economic performance, relatively stable inventory levels and the threat of higher interest rates down the road “proved mid-year game changers, providing the stimulus necessary to jump-start home buying activity,” Sandhu said.

As a result, the momentum that emerged in the latter half of the year is expected to spill over into 2014, setting the stage for continued growth and expansion in most residential markets, Re/Max said.

Overall, 23 of 25 markets surveyed, or 92%, are set to experience average price increases by year-end 2013, with Hamilton-Burlington the leader at 7.5%, followed by Barrie, Ont. and District at 7%, Calgary and St. John’s, NL, at 6%, and Greater Vancouver, Winnipeg and the Greater Toronto Area at 5%.

FP1212_Canada_housing_Market_C_AB

The forecast for 2014 shows the upward trend continuing, with values expected to again climb in 92% of markets surveyed, led by Greater Toronto at 6%.

Quebec and Atlantic Canada have been the exceptions to the rosy performance in 2013, with sales expected to fall below 2012 levels.

But even there things should improve next year, Re/Max said.

“Both regions should rebound in the new year, led by Halifax-Dartmouth (5%), Moncton (3%), Greater Montreal (2%) and Quebec City (2%).”

Although there are several factors that are expected to contribute to rising housing prices on a national basis, one of the most pressing is build out, Re/Max said.

“Nowhere is that more obvious than in Vancouver, where the mountains and the ocean have prevented further growth, and the Greater Toronto Area, where the greenbelt has stymied future development.”

“As such, the availability of low-rise homes relative to the population is expected to contract, placing further pressure on prices,” it said.

“We’re definitely seeing a greater commitment to higher density at a municipal level,” said Elton Ash, regional executive vice-president, RE/MAX of Western Canada.

“In fact, the trend already underway in Vancouver and Toronto, has gained serious momentum in smaller markets where cities are moving to infuse vibrancy into the urban core through mixed-use residential/commercial/retail development.”

How Home Maintenance Can Help You Pass a Home Inspection – Consult with Bruce Coleman, Vancouver Mortgage Broker

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From ClosingCosts.ca

Vancouver Mortgage Broker

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Is your home in tip-top shape? At first glance, your home might seem like it’s in good condition, but when it comes time to sell your home, a home inspector could reveal a plethora of home maintenance issues – some of which could affect your ability to sell. Most problems start out small, but if left unaddressed could result in costly repairs down the road.

Fortunately, home maintenance doesn’t have to be a hassle – or expensive. In fact, it can be easy and fairly inexpensive, if done frequently and thoroughly. There are three basic areas of home maintenance to consider:

1. Check Your Home for Drafts or Leaks

Checking your home’s window and door seals for drafts or leaks is a great first step to ensuring your home is maintained and not headed for trouble. Cold air drafts can result in higher heating bills, and water leaks can lead to water damage and even mold. A small repair job, if caught early, can often be done quickly and cost-effectively. A larger problem that has been overlooked for a long period of time, however, could be expensive to repair.

Once you’ve checked for internal issues, step outside to check your roof, vents, skylights and screens for spots where cold air or water might penetrate. When you go back inside, you can also check your refrigerator and freezer doors for air leaks, as well as your faucets for drips. In the basement, check for dampness that could indicate moisture is penetrating your home’s envelope. All of these spot checks should be performed at least annually, if not seasonally.

2. Check Your Home for Expiry Dates

It’s important to make sure the safety mechanisms that are supposed to be protecting your home are in proper working order. For starters, check the expiry dates on fire extinguishers to ensure they’ll work if you need them to. Make sure the batteries in your smoke detectors and carbon monoxide detectors are fully charged, or replace their batteries twice a year to be sure.

There are other items in your home that expire, even if they don’t have a “best before” date on them. Air filters need to be changed regularly, including the filters in your heating, ventilation and air conditioning (HVAC) system, your range hood and your clothes dryer. Change these filters at regular intervals to avoid having a potential fire hazard, and to make sure they’re performing as efficiently as possible.

3. Clean Your Home

Cleaning is one of the least fun home maintenance tasks, however, a little elbow grease is proven to go a long way towards preventing damage to your home. For example, mopping and vacuuming may not seem like home maintenance, but keeping your flooring clean not only helps it last longer but removes some of the dust that’s in the air and in your HVAC system.

During your monthly cleans, consider adding a few unusual tasks to your checklist, such as cleaning the air coils on your refrigerator to improve its energy efficiency and cleaning your hot water heater to remove the sediment that would accumulate at the bottom of your tank. If you have a fireplace, have it professionally cleaned at least once each year. And never, ever forget to clean out your gutters and downspouts.

Home maintenance is an integral part of homeownership. And while your home may look like it’s in good shape, there could still be problems you don’t notice on a daily basis that need be taken care of. It’s important not to skip any of these home maintenance tasks, so when it comes time to sell, you pass your home inspection with flying colours.

How does your home maintenance schedule compare to this list? Are you a home maintenance guru or do you need to adjust your schedule to make sure your home is physically fit?

The top 10 mistakes new home buyers make – Ask Bruce Coleman, Vancouver Mortgage Broker

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The top 10 mistakes new home buyers make – from MoneySense Magazine

Vancouver Mortgage BrokerWhy you should be wary of show homes, what to do if your place isn’t ready on time and much more

When Karen Somerville and her husband Alan Greenberg showed up for the pre-delivery inspection of their brand new luxury home in Ottawa they were horrified. Electricians, drywallers, plumbers and a variety of other tradespeople were still busy constructing their home and, despite assurances from the builder, the couple seriously doubted their $443,000 new build would be ready for possession in 14 days. Electrical wires hung from ceilings and stuck out from unfinished walls, appliances and cabinets were stacked in the kitchen, and only a portion of the hardwood floors had been installed. They immediately hired an independent contractor to examine the home. The result was a deficiency report citing 130 problems, including an undersized furnace and ductwork, poor ventilation and improper roof installation.

At first, Karen, then a university professor, and her husband Alan, an account manager with Sun Microsystems, tried to negotiate with the builder to resolve the problems. When this proved futile, the couple turned to Tarion—the private corporation that regulates Ontario builders and provides warranties on new houses and condos. Tarion sent its own inspector who confirmed that there were 85 defects in the home—but only 39 were considered to be under warranty.

Karen and Alan would be on the hook to fix the other defects themselves, which would cost the 40-something couple $4,000 or more. “This is the largest purchase we, as consumers, make,” says Karen, “and Tarion is supposed to be there to help.” Instead, she found herself having to document and defend an appeal against the provincial warranty program’s decision—despite paying a $650 fee for her new home warranty.

Buying a new home directly from the builder, whether a condo, townhouse or detached, is a popular choice. Almost one third of all homes sold in Canada each year are brand new. In Ontario alone, more than 52,500 buyers opted for a new build last year, and a forecast by the Canada Mortgage and Housing Corporation (CMHC) predicts that number will only climb. Despite the problems Karen and Alan encountered, it’s easy to see the appeal: Buying direct from the builder means you can customize your dream home to your exact tastes. It means higher energy efficiency ratings than older homes, and often higher quality building materials. New homes also have lower maintenance costs and are less likely to surprise you with a serious issues such as a cracking or tilting foundation, severe plumbing problems, asbestos or knob-and-tube wiring that needs replacing.

But as Karen and Alan discovered, there are some pitfalls specific to a new home purchase too—pitfalls that we don’t want you to run into. To help out, we’ve compiled the top 10 mistakes that new home buyers make, so you can be sure to avoid them. Read on to find out why you should be wary of the show home, what to do if your new place isn’t ready on time, how to save big money on upgrades, and most importantly, how to make sure that the dream home you’re expecting is the one you actually end up getting.

Mistake #1: They fall in love with the show home

When Jason Saxon and his wife Emily set out to find a builder in the quaint Edmonton suburb of Spruce Grove, they were surprised to find only two builders operating in the area. “Only one of them offered the separate dining room that we wanted,” says Jason, which made their choice easy. The deal was clinched when they toured the builder’s magnificent show home. “It had everything we needed,” gushed the systems analyst. The couple (whose names have been changed to protect their privacy) was so impressed by the show home they booked an appointment with a salesperson on the spot. Within days they had a signed purchase agreement and were busily designing their dream home.

That, of course, is the result every builder is aiming for, explains Stan Garrison, an industry insider with more than 20 years experience (we’ve changed his name to protect his privacy). “Most people fall in love with the show home, but you have to realize that everything you see in that model home is an upgrade,” he says. “And upgrades are a major portion of a builder’s 10% to 20% profit margin.”

Upgrades are so profitable for the builder because the industry standard is to charge double the sub-trade’s fee—a cost that is passed directly to the buyer, Garrison says. “That means the $8,000 granite countertops you ordered really cost your builder $4,000. Now multiply that by 25 buyers and you can see how builders make a profit.”

That doesn’t mean you should never order an upgrade, but you do need to be clear on what is an upgrade and what isn’t—and do a little bargaining so you don’t get taken for a ride. “With new builds there is no room for negotiation on the base sale price,” explains Max Wynter, a realtor with Re/Max Realtron Brokerage in Markham, Ont. “But there is room to negotiate the price of your upgrades.”

The rule of thumb is the more upgrades you spring for, the bigger the discount you should angle for. “If you purchase $5,000 in upgrades the builder may only give you a 10% discount,” says Garrison. “But purchase $50,000 in upgrades and you can start asking for $10,000 to $15,000 off the final price.”

Mistake #2: They trust the floor plan

Ken Grunber, who works at a video production house in Toronto, found out too late that the new condo unit he bought in 2007 wasn’t nearly as large as advertised. When he and his partner moved in and measured the area, they discovered it wasn’t 700 square feet after all. The condo was actually 560 square feet—if you don’t count the balcony and bathroom.

“That’s not unusual,” says Martin Rumack, a real estate lawyer with over three decades experience in new build construction. “Condo sales staff will often include balcony or terrace measurements as part of the total square footage. New home sales staff will provide square footage based on measurements of external walls. You can’t rely on their verbal assurances, on the floor models, or on the sale pitch or brochure.”

Unfortunately, many new home decisions are based solely on brochures or artist renditions. For instance, a sales brochure sold the Saxons on upgrading to French doors for the entrance to their walkout patio. “We’d originally seen the sliding doors in the show home, but a brochure highlighted the double French doors and we loved the look,” says Jason. They quickly paid the upgrade fee, but when they moved in they were surprised to find the doors didn’t have the little window panes with wooden slats between them that they had seen in the photo. Instead there was just one huge pane of glass in each door. “The price quoted by the builder’s sales rep didn’t include window slats, just clear glass. It would cost us more to get slats,” Jason says. “Now I know: get every detail in writing.”

In fact, the builder has the discretion to change an image, or floor plan, or layout and “you have no say,” says Rumack. He suggests asking for a breakdown of room sizes and plan details, and to “get it in writing.” Then, if there’s a substantial difference between what you’re sold and what you get you can either negotiate a price reduction or try and get out of the deal.

Mistake #3: They don’t get their contract lawyered

Whether you’re buying a new detached home or a condo, the purchase agreement is the legally binding document that spells out what you’re getting and the conditions of the sale. It’s full of fine print and legal-speak, and if you sign without legal representation, you risk being bound to terms you don’t understand or don’t want. More importantly, says Rumack, it destroys any chance of re-negotiating the terms of the sale.

“Skip legal advice and you could end up with an electrical utility box on your front lawn that you can’t do anything about, or no side door on your garage, regardless of what the plans looked like,” he says. “You could find yourself stuck with any manner of substitutions, exclusions or inclusions that could detract from your home’s future value.”

When you’re buying a condo, depending on the province you live in, you may have a cooling off period of up to 10 days. This gives you a chance to pay $800 to $1,600 and hire a lawyer to go through your contract after it’s signed. If you don’t like what they find, you can back out of the deal.

Unfortunately, there’s no such period for freehold homes, and many home builders demand that you sign a contract on the spot to secure your sale price or lot selection. Try to avoid this situation if possible, but if you must, at the very least insist on adding a clause that makes the deal conditional upon approval by your solicitor. “These days more and more builders are offering buyers a two-day period where they can seek legal advice before the contract becomes binding,” explains real estate lawyer Sheldon Silverman.

Mistake #4: They don’t bother with an inspection

During the home buying process there are two specific times when it’s important to have your house inspected. The first is the pre-delivery inspection, a mandatory walk-through for all new homes under warranty. This inspection takes place with your builder shortly before you officially take possession of your home. The second inspection should be scheduled for about one month before your home warranty expires. In Ontario the first and broadest portion of your warranty expires 12 months after your possession date, in B.C. it’s 24 months after possession.

During the pre-delivery inspection, you probably don’t need to pay for a professional inspector, but you might want to “take along a friend who’s wise about construction,” says Silverman, “because if you don’t write down the deficiency then the builder isn’t obligated to fix the problem.”

However, hiring a professional home inspector to do a second walkthrough before your warranty expires is a must. This will allow your home to go through all four seasons, which is enough time for major defects to start showing up, and you’ll still be able to get them fixed under the first stage of the standard provincial warranty, which covers against material and labour defects.

Mistake #5: They accept delays without a fight

Believe it or not, until quite recently, if your new house wasn’t ready on time, it was your problem. “Builders were not required to provide reasons or to limit their delays,” says Rumack. But that all changed when Toronto condo buyer Keith Markey challenged a Tarion decision five years ago.

In 2001, Markey bought a unit in a soon-to-be constructed condominium tower in downtown Toronto. His initial possession date was Nov. 30, 2002. But as the date approached, the builders kept sending letters announcing delays. Markey’s possession date was moved back six different times—he wasn’t able to move in until eight full months after the initial possession date.

He requested $5,000 from the builder to compensate him for the delays. The builder refused, the case went before a tribunal, and Markey won. Tarion appealed the case, but in 2006, Markey was vindicated: Not only did he receive almost $5,000 in compensation but close to $9,000 in damages. The case changed how Tarion and other provincial warranty programs handle builder delays.

“The law is now clear and critical dates are now included as part of the purchase agreement and contract,” says Silverman. “If a builder misses these critical dates and requires an extension, a buyer can either agree, and seek compensation, or simply get out of the deal.” Either way, Silverman suggests seeking legal advice whenever you’re presented with a request to delay a critical date.

Mistake #6: They forget they are moving into a construction zone

Anyone considering a new condo or home purchase should take into consideration the impact of ongoing developments. As one reader, who bought into the first phase of a three-phase condo development, recalls: “It’s noisy, everything is dusty and the air quality is just plain horrible—not even the best furnace filter could catch this dust. Combine that with the fact that the whole area is ugly for quite a long time and that access points can open and close, depending on the phase, and you have a recipe for long-term aggravation.”

Still, others, such as Jason Saxon, were mentally prepared for living in a construction site, and actually found it kind of fun—at times anyway. “You take the dust and dirt and noise with a grain of salt,” he says. “And it’s actually nice watching the homes go up.” In fact, there were only two days out of that first construction year when the Saxons and their neighbours felt truly inconvenienced. “When the builders put the final grading on our road no one could drive or park on our street,” Jason recalls. “For many of our neighbours that meant a hike through muddy and overgrown fields just to get home.”

Mistake #7: They think they have a warranty—but they don’t

Most buyers assume that all new-build lofts, condos and homes are covered by a provincial warranty, but this isn’t the case. Only three provinces—B.C., Quebec and Ontario—make warranty coverage mandatory. In fact, those are the only provinces that require new home builders to register with their respective provincial regulator at all.

“In Ontario, it’s illegal to build without being registered,” says Janice Mandel, vice president of corporate affairs at Tarion. But in other provinces, where the warranty program isn’t mandatory, builders can simply opt-out of coverage. Often they’ll try to convince home owners that they’re saving them the registration costs.

Buyers should be proactive and get their new home warranty in writing, says Mandel. They should also go online to determine if their builder is registered with a provincial regulator as a new home builder. This is particularly important for loft or condo conversions—residential units constructed inside an existing building shell. In such situations, new-build warranties often don’t apply.

Mistake #8: They’re not speedy with their warranty claims

When the Saxons first moved into their dream home near Edmonton, they were delighted. But they soon found themselves caught in a bureaucratic nightmare. During that first winter in their new home, they noticed a large crack in the cement-block floor of their garage. So they called the builder, who told them that when the ground thawed in the spring the problem would be fixed. A few months later, when the ground started to thaw, they noticed even more cracks stretching from their garage down their driveway. “We phoned, spoke to the site super, and even flagged down a builder’s representative, who promised us a new driveway.”

But weeks went by and nothing happened. “What was frustrating was coming home to see that our neighbour had a newly poured driveway and ours was still pock-marked and cracked.” That’s when Jason started sending emails. “You have to hound the builder, who seems willing to fix anything, but just needs a lot of motivation.” After weeks of sending emails and making calls the Saxons finally got a new driveway and garage floor.

The Saxons were able to get the problem fixed because they were proactive and understood that there are strict time limits on making claims. To ensure you understand how long you have, carefully read the package you get during the pre-inspection, as there are different deadlines for different types of warranty claims. “My advice: get a calendar and mark down those deadlines, and then make sure you get the claim in at least five days before the deadline,” says Peter Balasubramanian, vice president of claims for Tarion.

While you’re reading your new home package, you should also familiarize yourself with the maintenance you have to do to ensure your warranty remains valid. For instance, if you forget to change your furnace filters or fail to clean out your gutters you could find a claim regarding deficient heating or water penetration into your basement is deemed to be invalid.

Mistake #9: They’re ambushed by hidden closing costs

When you sign the purchase agreement for your new place, many of the closing costs are estimates. These costs often escalate as you approach your possession date, and both Rumack and Silverman have seen their fair share of “absurd” adjustments tacked on to a buyer’s purchase contract. For instance, you may find large charges that suddenly materialize for hooking up gas and electricity meters, plus mortgage discharge fees, development fees, deposit verification fees—Rumack has even seen a fee for “public art contributions” to cover the cost of a sculpture by a building’s entrance. “That’s why I pay close attention to the adjustments and try and get a cap on certain items and remove others,” Silverman says.

Mistake #10: They buy at the wrong time

If you’re buying a new condo or townhouse as an investment, the key is to get in as early as possible. In order to get the financing to start a new project, builders will often raise initial funding through pre-sales. These pre-sales often kick off with invitation-only VIP events, says Wynter. Usually, only high-volume realtors who specialize in the type of building on offer are invited. “If you see a line-up at a sales office, it’s often because a VIP event has been scheduled.” Once the VIP event is over, the builder will open sales up to all interested realtors, then finally they’ll open the project up to the public. “By the time a builder throws a grand opening for the general public, often 50% of the units have already been sold and the price has gone up three or four times,” explains Wynter.

It’s easy to get in on these VIP pre-sales, but you’ll need to work with a realtor who specializes in new developments and be ready to move quickly. For instance, the Paintbox development—the second phase of condos in the newly revitalized Regent Park area of Toronto—gave VIP realtors a week to register their clients for the pre-sale. Four days after registration closed clients were required to sign the paperwork.

Despite the potential savings on purchase price, this can be a risky way of buying real estate. When the Vancouver condo market turned in 2008 many pre-sale buyers found themselves with a contract price that was much higher than the current value of the unit. The builders refused to renegotiate the purchase contracts, and their banks refused to grant pre-arranged mortgages for the original purchase price. Many buyers were forced to either default—and lose their money—or find additional funding elsewhere, at significantly higher interest rates.

If you’re purchasing a freehold home, keep in mind that purchasing at the right time of year can also save you tens of thousands. For instance, in the Greater Toronto Area, the summer is the best time to shop for a new development, says Garrison. “People are on vacation in July and August and don’t have time to look for houses. When things slow down for a builder you have more bargaining power as a buyer.” Another good time to look is in December and January, but by mid-February activity starts to pick-up, says Garrison, and deals are taken off the table.

In Vancouver’s Lower Mainland the opposite is true: real estate and new home purchases are typically hot in the summer and slow down significantly over the rainy months of November and December. Each local market has its own cycle, so it’s best to talk to an experienced realtor.

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