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Consumer Protection for New Vancouver Home Buyers

Whether you are buying a re-sale home, new home or a strata property such as a condominium or a co-operative in the Vancouver area, you might be wondering what kind of protection exists for the consumer.

For example, what do you do when you buy a new home and encounter a structural defect because of a design flaw or shoddy materials or workmanship? And, what about older homes – what kinds of protection can you expect there if you encounter a similar problem?

The B.C. Home Protection Office

Also known as the HPO, the Home Protection Office is a branch of B.C. Housing. The legislative regulations are covered under the Homeowner Protection Act. Some of their primary duties of the HPO include the following:

• Issuing licenses to residential builders and building envelope renovators throughout the province
• Owner-builder authorization administration
• Mandatory mediation of warranty insurance disputes between homeowners and warranty insurance providers

The province of B.C. has the strongest construction defect protection system for buyers of new homes in Canada. Legislation came into effect on July 1, 1999. It covers any new homes which were being sold, built and states that any new homes after this date must adhere to the following:

• The home must be constructed by a builder who was licensed by the HPO
• Any new home built after this date must have warranty insurance provided by a third party

What Does Warranty Insurance Cover?

Warranty insurance follows the 2-5-10 concept in that it must cover the following:

• 2 years protection for any defects in design , labour or materials used
• 5 years protection for any defects in the envelope of the building
• 10 years protection which means that if a home covered under the legislation is sold within 10 years, the remaining home warranty insurance is passed on to the new owners

However, you should be aware that this may not completely apply to an owner-builder.

Older homes which were built before this July 1, 1999 will not have warranty insurance, so the consumer must be very proactive in having the home thoroughly inspected before they invest in older homes. You should always ask your realtor about warranty insurance and whether it applies to the home or condo you are buying.

If you are buying a condo or a coop, then you should also know that there are specific regulations which cover you as well. You are best advised to visit the website to obtain more information so that you understand your rights and to know what is covered and what is not covered.

You can also find valuable information when you’re buying a custom built home versus a home spec and what you should know about the contracts involved so you are properly protected. These types of contracts should be reviewed by an experience real estate lawyer before you sign on the dotted line.

You should also be aware that City of Vancouver has its own Building Code requirements and you should ask if the home requires inspection by city inspectors especially if you are thinking of buying a home built before July 1, 1999.

If you do uncover a problem then you should also visit the HPO website which will explain the dispute resolution process which may be resolved through either mediation, arbitration or whether litigation will have to be considered.

New Homes Registry

For those buying a new home you can also check out the New Homes Registry which can be found at the HPO website. This registry allows you to check out both the licensing of the builder and the status on warranty insurance. You can also obtain information of the warranty insurance claims history from the current home owner of the house you are thinking of buying

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Using Solar Power For Your Vancouver Home

Going green and doing everything you can to help save energy and preserve the environment is a hot topic issues these days. The cost of heating a home in the winter months is enough to make any every Canadian grimace.

The good news is that there are alternatives and one popular approach is to go solar. More and more you are seeing solar panels being installed on the roofs of homes, apartments and businesses throughout the City of Vancouver.

But, is solar power the right investment for you? The answer to this question depends on a number of variables because using solar power may not be suitable for everyone.

How Do Solar Power Systems Operate?

Systems are either stand alone systems which separate you from the power grid or are grid connected. The proper name for solar heating is called Solar Photovoltaic’s of PV for short. Solar panels are either a series or parallel connected modules and the number depends on the power requirements.

The size of the system, the battery bank and the AC inverter depends on how much power you require and how you intend to use the solar system, the amount of sunlight available and the number of days you require without back up.

The panels are generally oriented to face in a southerly direction. You might be interested to know that solar systems actually work more efficiently in colder weather and are very suitable for northern climates. Systems can provide anything for smaller needs such as watts (W), kilowatts (KW) per or larger power needs such as megawatts (MW).

The Canadian Electrical Code has made it very convenient for you to provide power to yourself or to feed any excess power back to the utility company.

Solar System Uses

A solar system can be used with two approaches in mind including:

• Solar Water Heating
• Solar Air Heating

Solar Water Heating

Heating your water with solar power can be used in several different ways such as for all your drinking and washing needs, radiant floor heating or simply to heat your swimming pool.

Solar Air Heating

The purpose of solar panels used in this application is to simply heat the air that is coming into your home.

For most people, solar water heating may be a more economic and practical approach because these systems are fairly expensive and can take up to seven or more years before you can recover your investment.

Buying A Solar Power System

If you’re thinking of going this route then you need to really do some research first. You might want to first start with the Canadian Solar Industries Association. They also have a convenient to use checklist to help you get started. A good installer will research your household energy consumption in detail.

Just remember that not every house is going to be a good candidate for solar power. You also want to look for any available government rebates and to find out how you might be able to offset the costs as most provincial hydro companies will buy excess power your system generates from you.

In B.C. this operates on a net metering system where you can be reimbursed by B.C. hydro which will credit your account once per year. You will have to check with B.C. hydro to apply and to ensure that your system qualifies. Currently, B.C. hydro is paying $9.99 per kWh.

The hidden trap of mortgage penalties at the big banks- Consult with Bruce Coleman, Vancouver Mortgage Broker

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ROB CARRICK – The Globe and Mail

It’s easy to get caught in the posted mortgage rate trap at the big banks.

(HerminUtomo/THINKSTOCK)

No, you won’t have to pay the posted rate on your next mortgage. Pretty much nobody does that any more, according to mortgage broker Robert McLister. The real danger is that posted rates will be used to calculate the penalty if you ever have to break your mortgage, probably costing you thousands of extra dollars.

A mortgage penalty compensates a lender for the interest payments it loses out on when you break a mortgage contract. “That’s the intention,” said Mr. McLister, who is also editor of CanadianMortgageTrends.com. “But in many cases, it overcompensates. It’s punitive in many cases.”

As we head into another round of quarterly bank earnings reports, it’s worth thinking for a moment about how those wonderful profits and dividends for investors are generated. One way is by using posted instead of lower discounted rates when calculating how much to penalize a client breaking a mortgage.

With houses as expensive as they are today, it’s crucial to get the lowest mortgage rate you can. Keep the same level of focus when inquiring about mortgage penalties. Although it’s hard to imagine the need to break a mortgage on a house you’re just buying or living in happily, it can happen. Mr. McLister said roughly 70 per cent of people adjust their five-year fixed rate mortgage before maturity, although many do it to refinance or move to a bigger house rather than to break the mortgage outright.

Mortgage penalties are straightforward if you have a variable-rate mortgage – expect to pay the equivalent of three months’ interest in most cases. With a fixed-rate mortgage, the penalty is set at the higher of three months’ interest or a calculation called the interest rate differential, or IRD. The must-ask question when negotiating a fixed-rate mortgage: Do you use discounted or posted rates to calculate these penalties?

This is important because using posted rates can result in a much higher penalty. For some real world numbers, let’s use the mortgage prepayment calculators all lenders now provide on their websites. They show penalties for paying all or a portion of your remaining mortgage balance (to find them, Google your lender’s name and “mortgage prepayment calculator”).

Let’s use an example of someone who, three years ago, set up a $250,000 five-year mortgage and has a balance owning of $200,000. Assuming an original mortgage rate of 3.64 per cent with a discount of 1.5 percentage points, the mortgage prepayment calculators at several big banks showed penalties ranging from $5,000 to $7,600 or so.

A check with some alternative lenders found penalties ranging from $1,800 to $2,800. These are very rough comparisons because lenders differ a fair bit in what information they ask you to supply. But you get the picture – the big banks apply penalties with a sledgehammer.

As well as producing revenue for lenders, inflated mortgage penalties also help trap clients who might otherwise move their business to another lender. Imagine you want to refinance your mortgage or buy a bigger home and your bank won’t come across with a competitive rate. You say you’ll change banks, only to find out how prohibitively expensive it is to break your mortgage.

Mr. McLister said some banks have a stated policy of offering clients only a small discount off the posted rate if they want to add on to their mortgage to buy a more expensive house. You may be able to negotiate something better than a trivial discount, but your bank knows your leverage is limited because of the penalty you face if you go.

Alternative lenders often have better rates than the big banks, and they typically have cheaper penalty fees. Why do so many people use their banks for mortgages, then?

Mr. McLister speculated that some borrowers like the convenience of having their mortgage where they bank, and of being able to go into a branch to talk about their mortgage. If you prefer transacting online, some alternative lenders don’t have great websites.

One thing you do not need to worry about if you borrow from an alternative financial institution is that your lender will go bankrupt. “It’s funny that people look at mortgages and think, I need a safe lender.” Mr. McLister said. “If a lender goes out of business, pretty much nothing is going to change except for the name of your new lender.”

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

 

3 Reasons to Refinance Your Mortgage – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Refinancing your mortgage – it sounds scary at first! But having the option to refinance can actually be a good thing. In fact, refinancing your mortgage can be a great financial tool – one that helps you accomplish financial goals at a low interest rate – but be careful! A refinance leaves you on the hook to pay an expensive prepayment penalty, meaning that it might cost you more money than you’d save.

Flickr: james.thompson

Let’s take a look at three examples where refinancing is the right option, with our test subject Molly and her $350,000 home.

1. Taking Advantage of Low Interest Rates

Refinancing to take advantage of low interest rates might be a great way to save money, but it’s extremely important to be aware of the prepayment penalty you’ll have to pay upfront to get that rate. For example, Molly has a $225,000 mortgage on a home that is valued at $350,000. She’s 3 years into a 5-year fixed rate term at 5.00%. Molly is considering refinancing another 5-year term at a lower interest rate of 3.50%.

At first glance, this seems like a great idea! Saving 1.50% on a $225,000 mortgage means Molly would save $6,750 in interest (1.50% x $225,000 x 2 years). However, by using thismortgage refinance calculator and factoring in her prepayment penalty of $2,813, we can see that Molly would only save $3,937 after she pays the penalty to break her mortgage term early. Refinancing will still save Molly money, but the savings aren’t nearly as good as she first anticipated.

2. Accessing Equity in Your Home

Refinancing your mortgage can allow you to access up to 80% of your home’s value. By refinancing, you can access your equity and use those funds to renovate your home, send a child to post-secondary or buy a second property, without having to sell your home or take on a second loan at a higher interest rate.

For example, if Molly wanted to access the equity in her home to renovate her kitchen, she could access 80% of the value of her home, minus the value of her outstanding mortgage, for a total of $55,000 ($350,000 x 80% – $225,000). Her new mortgage would be $280,000 ($225,000 + $55,000), and her payments would decrease from $1,745 to $1,398 due to the new term and lower interest rate. She’d still have to pay a refinancing penalty fee of $2,813, which would cut into that $55,000, but she’d have access to that equity at a much lower interest rate than if she’d taken out a traditional loan.

3. Consolidating Debt

Finally, one of the most popular reasons to refinance a mortgage is to consolidate debt. Mortgages are one of the least costly forms of debt available, with lower interest rates than a credit card or even a personal line of credit.

For example, if Molly wanted to pay off $20,000 of credit card debt that had an interest rate of 19.00%, she could refinance and use the equity in her home to do so, shifting her high interest consumer debt over to her much lower interest mortgage debt. Don’t forget that Molly would still have to pay a prepayment penalty of $2,813. Her total mortgage amount would also increase to $245,000 ($225,000 + $20,000), but she would save thousands in credit card interest charges.

Costs of Refinancing Your Mortgage

Before you refinance your mortgage, it’s important to calculate the closing costs involved to see if it’s the right choice for you. For starters, you’ll have to pay a prepayment penalty. If you have a fixed rate mortgage, it’s the greater of three months’ interest or the interest rate differential (IRD). If you have a variable rate mortgage, the penalty is just three months’ interest. Either fee could outweigh the savings you would get through a refinance, so it’s important to calculate the penalty before you go through with the refinance.

You may also have to pay a real estate lawyer to conduct another title search, as well as review all documents, register the new mortgage and facilitate the financial transaction. If you have more than $200,000 left on your mortgage, many lenders and brokers will cover this legal expense for you.

From ClosingCosts.ca

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Design Tips For Your Kitchen

Your home’s kitchen is in many ways an important focal point. Great meals and good times evoke lots of fond memories about kitchens for many people. And, if you plan to sell your home sometime in the near, keep in mind that the kitchen is often one of the most scrutinized areas and can affect whether a potential buyer will make an offer or move on.

However, if you’ve lived in your home for awhile or just bought an older home, then now might be the perfect time to consider upgrading your kitchen. It’s an expensive project which means you have to take the time to plan carefully.

If you have sufficient equity then you might want to consider using a HELOC (Home Equity Line of Credit) to pay for the renovations. Kitchen renovations have a great ROI, especially if you’re preparing to sell so it’s very possible you will add more value to the home and recuperate a big chuck of this expense.

First Steps of Kitchen Re-Design

First, step back and look at your kitchen and ask yourself how you might want the kitchen to look like if you were a prospective buyer. Ask yourself what the kitchen lacks and look at it from the ceiling down to and including the floor itself.

Of course, it all depends on the amount of space that you have to work with and how much you are prepared to spend because there are a broad range of materials to consider. You also have to consider the age and style of your home. You can do anything from a rustic approach to ultra modern, but consider that the style of the kitchen should mesh with the style of your home.

Should you go too far in upgrading the kitchen and the rest of the house looks a bit “tired” it could dissuade a buyer because they might think they will have to upgrade the rest of the home.

Consider such ideas for lighting, the availability of wall sockets, the type of floor and how the kitchen might be re-designed to be more functional and take better advantage of the available space.

There are many design ideas out there to consider, but start with the basic precept used by most kitchen designers which use a triangle concept which takes into account the accessibility between the two main appliances being the fridge and the stove and your food preparation space which are your counters.

You also have to consider how much counter space might be taken up by other appliances such as the coffee maker, toaster, microwave and other kitchen gadgets. This is one of the reasons why you also have to consider the electrical needs of the kitchen before you start filling in space with new cabinets and counters.

The Basic Kitchen Floor Plan Concepts

Getting the floor plan just right is vital for an efficient kitchen design because there is a natural pathway between the two main appliances in relation to the sink. The shape of and size of your kitchen doesn’t really affect the floor plan because designers have pretty much seen it all.

Here are some of the basic floor plans to consider.

U-Shape Design

A design such as this is comprised of 2 legs of equal length which has the fridge and stove opposite to each other. Often, there is also a third appliance such as a dishwasher which is situated to be equidistant from the other two appliances.

L-Shape Design

In this design scenario, which usually applies to rectangular sized kitchen, the two main appliances or two of the three appliances are situated along the longer leg of a the rectangular kitchen and the third appliance is situated at the shorter end.

G-Shape Design

Here you have a bit more flexibility because you either of the plans described above. This type of space usually has a peninsula which separates your kitchen work space from either the formal dining room or your living area. It is something like an area which is used as a breakfast nook for example.

Galley Style Design

Some kitchens are especially small and generally use this design where the stove and sink are situated directly opposite from each other and can often be found in a condominium or rental apartment.

Final Steps

You will want someone who specializes in kitchen design and remodelling to help guide through the process and in selecting materials. This is not a typical DIY project nor should it be contracted out to general contractor who has limited experience in this area.

Drop in home building signals Canadian market stabilizing – Consult with Brice Coleman, Vancouver Mortgage Broker

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TORONTO — New homebuilding in Canada slowed slightly in November, coming in below economists’ expectations and suggesting some stabilization for the country’s robust housing market, data released on Monday showed.

The seasonally adjusted annualized rate of housing starts was 192,235 units last month from a downwardly revised 198,161 in October, the Canada Mortgage and Housing Corp said.

That was short of analysts’ expectations for 195,000. Housing starts in October were initially reported as 198,282.

Still, the longer-term trend fared better, with the six-month moving average of seasonally adjusted starts dipping only slightly to 194,014 units from 195,274.

Canada’s housing market has shown resilience this year after a slowdown in the second half of 2012 when the federal government tightened mortgage rules due to concern consumers are taking on too much debt.

Policymakers have kept a close eye on the housing market, which boomed following the financial crisis due to record low borrowing costs. Some fear this could lead to a U.S.-style crash, though the Bank of Canada said last week it still expects a soft landing.

“Canadian homebuilding activity might be a touch on the warm side, but builders still look pretty well behaved overall,” Robert Kavcic, senior economist at BMO Capital Markets, wrote.

While starts are somewhat ahead of the amount needed to account for household formation at about 180,000, they are comfortably below levels seen during the pre-recession period, Kavcic said.

Many analysts expect mortgage rates, largely set off of bond yields, to push higher next year, which should also prevent the sector from becoming overheated.

“The momentum in the market does lay to rest any fears of a sharper retrenchment, but we expect that the gradual grind higher in yields in 2014 and beyond will drive a more sustained pullback in construction,” David Tulk, chief Canada macro strategist at TD Securities wrote in a note.

Multiple housing unit starts in urban areas decreased by 3.5% to 111,036 units last month, while single-detached urban starts also fell by 3.1% to 60,311.

“Overall, housing starts have been following a trend similar to sales on the existing home market. As sales rise relative to listings of existing homes, buyers are increasingly meeting their needs in the new home market,” Mathieu Laberge, deputy chief economist at CMHC, said in a statement.

The seasonally adjusted annual rate of urban starts slowed in Ontario and the Atlantic provinces, while picking up in Quebec, the Prairies and British Columbia.

© Thomson Reuters 2013

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Abnormally low inflation is keeping Stephen Poloz awake at night. The Bank of Canada (BoC) admitted as muchon Wednesday.

Analysts took the BoC’s headline comment (“downside risks to inflation appear to be greater”) as a sign that rate hikes will be a 2015 story.

But, for now, there is one key indicator that trumps Canadian CPI inflation, and this is it:

What you’re looking at is a chart of the U.S. benchmark bond yield. In early 2014 it will likely influence Canadian fixed mortgage rates more than any other factor (as it often does).

Economically speaking, we’re in bed with our neighbours below. Their recovery is our recovery. Despite temporary divergences, U.S. and Canadian bond yields should remain tightly correlated. (This is relevant because bond yields lead fixed mortgage rates.)

For that reason, we must keep at least one eyeball on U.S. rates, despite the fact that Canadian inflation is below target.

If U.S. yields continue uptrending, so should Canadian fixed mortgage rates. That could hold true even if the Bank of Canada kept short-term Canadian rates as-is for the time being.

Speaking of short-term rates, financial markets have been pricing in greater odds of a rate cut than a rate hike through mid-2014. While no one truly expects a cut, this probability is nonetheless positive for existing variable-rate mortgagors.

And new variable-borrowers could be happier yet. That’s because lower short-term funding costs may very well improve variable-rate discounts. The improvement would be slight, but noticeable. Just this week we saw the first prime – 0.70% rate since 2011. (It was from an online mortgage broker in B.C. and is not market-representative…yet).

So how do new borrowers plan around all of this? One sensible option for many is the 50/50 hybrid mortgage. Some call it the mortgage for people who can’t make up their mind. But it’s actually a mortgage for people wise enough not to pretend they’re smarter than the market.

A 50/50 hybrid (half-variable/half fixed) can now be found for 2.95% or less. For that price, you’ll enjoy:

1. 50% less rate hike exposure (versus a variable rate)
2. A chance to benefit if deflation threats or unemployment keeps the BoC sidelined past 2014 (Bay Street consensus is for the first hike in mid-2015).

The next BoC rate meeting is slated for January 22. That day will be must-watch TV because, by then, we will have:

• Two more inflation reports under our belt
• Two more employment reports
• Knowledge of whether national housing prices make another record high (housing imbalance is the second thing keeping BoC chief Poloz up at night)
• Clarity on the risk of another U.S. government shutdown (current U.S. government funding expires January 15)
• More hints on whether incoming Fed chairYellen will trim rate-friendly quantitative easing.

That last point could chart the course of bond yields more than anything else.

By Robert McLister, Editor, CanadianMortgageTrends.com

Consumer confidence nears year high as Canadians put faith in rising house prices- Ask Bruce Coleman, Vancouver Mortgage Broker

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The share of respondents who think real-estate prices will increase over the next six months rose to 40.3 from 40.0 the previous week, reaching the highest level since March 2012

Canada’s economic mood rebounded last week as consumers head into the holiday season buoyed by rising house prices, according to the Bloomberg Nanos Canadian Confidence Index.

The weekly sentiment measure increased to 59.3 in the period ended Dec. 6, up from 58.9 the week before. The index has climbed from 54.8 at the end of May and is approaching a one-year high of 59.8. The share of respondents who think real-estate prices will increase over the next six months rose to 40.3 from 40.0 the previous week, reaching the highest level since March 2012.

“Canadians are poised to finish 2013 with more buoyant consumer confidence which is more likely to be fuelled by increasingly positive views on the value of real estate,” said Nik Nanos, head of Ottawa-based Nanos Research Group.

Canada’s housing market remains strong even as policy makers take steps to cool growth. Canada Mortgage & Housing Corporation, a government-owned agency, said Nov. 29 the government will charge it a “risk fee” of 3.25% starting Jan. 1 on the mortgage insurance it writes.

Housing starts slipped 3% in November to a seasonally adjusted annual rate of 192,235, CMHC reported Monday. Building permits rose a second month in October as residential projects approached the highest ever, Statistics Canada said Dec. 5. Residential permits increased 6.4% to $4.41 billion, close to the $4.55 billion record posted in May.

Pocketbook, Expectations

The average sales price of a Canadian home rose 12.3% in November from a year earlier to $551,820, according to data compiled by Bloomberg from regional real estate boards.

Bloomberg Nanos’s confidence index has two sub-indexes: the Pocketbook Index, based on survey responses to questions about personal finances and job security, and the Expectations Index, based on surveys about the outlook for the economy and real- estate prices.

The Pocketbook Index rose to 60.8 from 60.3, while the Expectations Index increased to 57.8 from 57.5, according to the Nanos report.

Confidence in the first week of December increased across all age groups, according to the Nanos survey data, except for respondents between 40 and 49 years old. Sentiment improved in the Atlantic provinces, Quebec and British Columbia while declining in Ontario and the prairie provinces.

The Bank of Canada is weighing evidence of a sluggish economic recovery against concerns low interest rates may overheat the nation’s housing market.

Stronger Housing

Housing has been stronger than expected, central bank policy makers said Dec. 4 as they kept the benchmark lending rate at 1%, where it’s been for more than three years.

Governor Stephen Poloz said the risks of inflation staying below the central bank’s target “appear to be greater” in an economy that’s two years away from reaching full output.

The Teranet-National Bank Composite House Price Index will be published Dec. 12. Statistics Canada will report household debt levels for the three months ended Sept. 30 on Dec. 13.

“Gains in hourly wages and a modest acceleration in hiring likely bolstered Canadian consumer sentiment,” said Joseph Brusuelas, senior economist at Bloomberg LP in New York. “While the tone to Canadian macroeconomic data has turned somewhat positive, household imbalances and mild disinflation will continue to weigh heavily on policy makers at the Bank of Canada and consumers alike.”

Part-Time Work

Canada’s jobless rate held at 6.9% in November, the lowest since 2008, as employers added part-time workers, Statistics Canada reported Dec. 6. Average hourly wages of permanent employees rose 2.3% last month from a year earlier.

The Nanos data are based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate within 3.1 percentage points.

The share of Canadians who say they’re better off financially over the last year fell to 21.2 from 21.5% the previous week, while those who say the Canadian economy will improve in the next six months rose to 24.4% from 23.5%.

Canadian household credit grew at the slowest pace in 30 years in October as consumers seek to pare record debt levels. Total household credit expanded by 3.7% from the same month in 2012, according to the Bank of Canada’s household and business credit indicators report.

The proportion of respondents who say they feel their jobs are secure rose to 67.2 from 66.6 from the previous week, according to the Nanos report.

Bloomberg.com

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Andrew Allentuck | 

Mortgage default may be rare in this country, but nearly 9% of indebted households need 40% or more of their gross income to pay their debt service charges, says the Bank of Canada Financial System Review.

If you can see problems coming, then you can take action to avoid foreclosure, which happens when lenders run out of other alternatives and borrowers can do no more to pay their debts. Here are five options to consider when you are being crushed by mortgage payments:

1. Extend amortization: If the mortgage has been paid down to 10 or 15 years, then extending it to 20 to 25 years or even to 30 years will decrease payments. In a lot of cases this will work, says Elena Jara, director of education for Credit Canada Solutions, a Toronto-based non-profit organization which offers free credit counselling.

2. Seek better terms: You can go for lower interest rates with the same or a different lender but with a potential penalty, says Bill Evans, a mortgage broker with Mortgage Architects in Winnipeg.“If you are having trouble with payments with one lender, another may not want to take you on. But if you can present a case for a new income, you can go to a so-called specialty lender such as Home Trust or Optimum Trust for a fresh look at your problem and potential solutions,” Evans says. “If you just want to alleviate the problem, timing is crucial.”

3. Renew at a floating rate: There is more risk but lower interest cost in floating rate mortgages. If you are on a fixed rate mortgage with relatively high rates and want to go to a lower floating rate, perhaps by taking the mortgage to another lender, then there may be relief when it is time for loan renewal. The present lender may add a penalty, but over time, floating rates and the often attractive rate on a one-year closed loan can offer relief, Mr. Evans says.

4. Sell it and rent: In markets with high home prices as a result of speculative building, absentee owners will often rent at relatively low cost. That makes for good deals for renters.

5. Discuss a consumer proposal: The homeowner can avoid outright bankruptcy and foreclosure of the home by talking to creditors, suggests Bruce Caplan, trustee in bankruptcy for BDO Canada Ltd. in Winnipeg. “The homeowner can make a consumer proposal in which a settlement plan is devised for the creditors. Secured creditors such as the banks or private mortgage lenders can work out new terms such as reduced payments or a payment bridge for a period of time with the homeowner,” he suggests.

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