themortgagebroker Blog

As a first time home buyer, you may have heard that you may have to pay a mortgage insurance premium.

You will have to obtain mortgage loan insurance when you purchase a home and if your downpayment is LESS than 20%. Remember that lenders do reserve the right to insure your mortgage even if your downpayment is greater than 20% and this decision is often based on the risk associated with the financing. The key players that provide mortgage insurance in Canada today are CMHC, Genworth and AIG United Guaranty. The newest insurer to join is AIG United Guaranty. There may be more mortgage insurers joining the industry who may apply to the OFSI (Office of the Superintendent of Financial Institutions) to become mortgage insurers in Canada. More competition will result in more choice and lower premium costs for Canadians who want to purchase a home.

Here is a sample breakdown to help you understand how a mortgage insurance premium is calculated for a buyer who wants to purchase a home with a 5% downpayment.

Price of home being purchased	(A) $242,000
Your saved 5% downpayment	(B) $12,100
Price less downpayment (A) – (B) =	(C) $229,900
Insurance Premium calculated for a 5% downpayment is 2.75% of amount $229,900 Total mortgage loan insurance premium is à	(D) $6,322.25
Total amount advanced to you by the Lender total mortgage amount (C) + (D) =	$236,222.25
The lender who is reviewing your mortgage application will include the mortgage insurance premium (on your mortgage commitment) as part of your total mortgage loan and this is repaid over the term of your mortgage loan. You can also pay this premium up-front, on closing date, if you prefer.

It is also important to point out that the mortgage loan insurance premium (calculated in example above) is also subject to provincial sales tax and this tax amount is not included in the total loan amount therefore you would have to pay this sales tax on your closing date.

Here below is a table that gives you an idea on what the typical mortgage loan insurance premiums are, but you should go directly to the various insurer websites to check the current insurance premiums when you are ready to buy.

The mortgage loan insurance premium charges are calculated as follows:

Financing Needed on the Purchase

Insurance Premium

Up to and including 65%

0.50 %

Up to and including 75%

0.65 %

Up to and including 80%

1.00 %

Up to and including 85%

1.75 %

Up to and including 90%

2.00 %

Up to and including 95%

2.75 %

You may be asking, so why do I need mortgage loan insurance, is it mandatory, and who does it protect?

Why do I need mortgage loan insurance? It is the lender who requires the mortgage loan to be insured. The mortgage lender passes along the cost of insuring that mortgage, along to the consumer.

Is mortgage loan insurance mandatory? No. There are a few mortgage lenders, on the market, who may provide you with mortgage financing without mortgage loan insurance but there will most certainly be a much higher interest rate offered as well as other administrative fees that could be added to the mortgage loan amount. These other mortgage lenders can be accessed through the mortgage broker community.

Who does mortgage loan insurance protect? Mortgage loan insurance is required by the mortgage lender because it protects the lender, if, the borrower, for some reason, cannot pay their mortgage.

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca

Written by mortgagemississauga

October 24, 2008 at 2:37 pm

Mississauga – Pay off high interest debts

If you are already a home owner, you will likely have equity in your home. Using that equity to pay off your consumer debts may be an option that will ease some of the stress of paying high interest debts over a long term. Instead of paying your credit card debts at 18 – 28% interest, you may be able to consolidate that debt into your mortgage and pay it off at less than 6%.

Current Debt Position	Balance	Monthly Payment
1^st Mortgage at 5.7 % (amortization 19 years)	$220,000.00	$1,573.78
2^nd Mortgage at 14%	$40,000.00	$469.55
Car Loan and Credit Cards	$18,857.00	$915.71
Total Mortgages + Car Loan + Credit Cards	$278,857.00	$2,959.04

New Debt Position	Balance	Payment
New Mortgage at 5.25% (amortization 19 years)	*$278,857.00	$1,926.60
2^nd Mortgage at 14%	$0.00	$0.00
Car Loan and Credit Cards	$0.00	$0.00
Total Mortgage + Car Loan + Credit Cards	$278,857.00	$1.926.60
Total Monthly Saving: $2,959.04 – $1,926.60 =		$1,032.44
*CMHC insurance fees and cancellation penalties may apply. This example is illustrative only. Interest rates are subject to change without notice.

Consider above, a recent client with a mortgage balance of $220,000, a second mortgage at $40,000 and other debts totalling $18,857. By consolidating the two mortgages, the car loan and the high interest credit cards, the client was able to reduce monthly payments and save $1,032.44 per month. It is important to note that for this exercise to bear real financial fruit, this monthly saving should be applied to either an investment or as additional principal payments against the new mortgage. All too often, the additional cash flow is consumed resulting in a similar crisis a few years down the road.

Such a consolidation will not only reduce monthly debt load but will improve and protect your credit rating, a major consideration for any Canadian seeking future loans. Missed or late payments are not the only factors that can reduce your credit rating in the eyes of financial institutions, credit cards and lines of credit that are “maxed out” have the same negative impact. You should always know, validate and protect your credit rating as much as your SIN number and credit cards. When it comes time to renew your mortgage finance, you will be glad you kept your credit rating in good standing.

You can contact Elizabeth directly by phone at (905) 510-5785, by email at eblair@mortgageedge.ca or you visit her website at: www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Written by mortgagemississauga

October 24, 2008 at 12:18 am

Mississauga – Understanding your credit rating

What is your credit rating score? If you don’t know, you are at risk of being refused credit, paying higher interest rates or being considered a high risk by banks, employers or others who have access to credit rating files.

If you have a credit card, a line of credit or a car loan, you have a credit history and it is being recorded in a credit report by credit reporting agencies, Equifax, Trans Union or Experian Canada Inc. These Credit Reporting Agencies collect information on your ongoing use of credit and your repayment of that debt. As you continue to utilize your credit cards, pay your car loan or your line of credit, you will be assigned something called a “credit score”. A credit score is a numerical scoring measurement of an individual’s use of credit, specifically repayment of debt. A higher score would indicate a borrower has better management of their consumer debt while a lower score would indicate poor management of consumer debt. There are several factors that can affect your credit score, for example, whether you pay your debts on time, the total amounts that you owe, delinquent payments, collections that may have been filed against you or limits that have been exceeded or “maxed out”.

If you currently have a mortgage or will be applying for mortgage financing, you may know that mortgage lenders will want to see your credit report. You will need to provide permission to the bank or mortgage broker to retrieve your consumer credit report for review, at the time of your application for a mortgage. Once the credit report is retrieved, it will be carefully reviewed, by the lender, to determine what mortgage rates you are eligible to receive. Many applicants are surprised to learn that lenders establish very specific guidelines on what mortgage rates they will offer and it is usually based on an applicant’s credit score.

Take the time to understand how you can achieve and maintain the best credit score. When it is time for you to renew your mortgage financing in the future, you will be able to qualify for the best mortgage rates.

Here are some quick tips to help you:

1. Be sure to pay your bills on time.

2. Avoid exceeding your credit limits.

3. Avoid having too much available credit.

4. You should always know, validate and protect your credit rating as much as your SIN number and credit cards.

5. You can check your credit rating for accuracy once a year free of charge. Just call Equifax at 1-800-465-7166 or go on-line at http://www.equifax.ca and fill out the form at

http://www.equifax.com/EFX_Canada/consumer_information_centre/docs/request_report_form_e.pdf or you can purchase a copy of your credit report on-line.

6. Often, a file contains data that is out-of-date or inaccurate. If you find any information on your credit report that is not accurate, you should contact the Credit Reporting Agency to have it corrected.

7. Be sure to download a copy of the document entitled “Understanding Your Credit Report and Credit Score” published by the Financial Consumer Agency of Canada by going to http://www.fcac-acfc.gc.ca.

This article was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth Blair services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785, by email at eblair@mortgageedge.ca or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Written by mortgagemississauga

October 22, 2008 at 1:54 pm

Using your home equity for home improvements

You may be thinking about the projects that need to be completed around your home; landscaping the garden, rebuilding a patio or fence, changing older windows and doors, a new roof, or even remodeling a basement, kitchen or bathroom. Tune in to some of the recent popular TV programs like “Extreme Makeover Home Edition” and you will surely catch the bug.

If you live in a freehold house, you should be spending an average of 1% of your home value annually on maintenance just to keep it in good repair and to prevent it from declining in value, according to “Home Buying for Dummies” by Eric Tyson and Ray Brown. Professional home improvements and renovations, according to the Appraisal Institute of Canada’s 2004 Home Renovation Survey, can provide homeowners with the following return on their investments:

Top Four Renovations that will give you the Highest Payback Potential

Bathroom renovations (75-100%)

Kitchen renovations (75-100%)

Interior painting (50-100%)

Exterior painting (50-100%)

Other Renovations Payback Potential

Roof shingle replacement (50-80%)

Furnace/heating system (50-80%)

Basement renovation (50-75%)

Recreation room addition (50-75%)

Installing a fireplace (50-75%)

Flooring (50-75%)

Constructing a garage (50-75%)

Window/door replacement (50-75%)

Building a deck (50-75%)

Central air conditioning (25-75%)

Six Renovations that will give you the Lowest Payback Potential

Landscaping (25-50%)

Interlocking paving (25-50%)

Building a fence (25-50%)

Asphalt paving (20-50%)

Adding a swimming pool (10-40%)

Installing a skylight (0-25%)

How do you find the cash to pay for these various projects? If you are already a homeowner, you will likely have equity in your home. Equity is the present fair market value of the property less your outstanding mortgage amount. Using that equity to finance home renovations is a real option. You may borrow up to 100% of the value of your home, based on certain criteria. Contact Elizabeth to find out how you can access your home equity to pay for projects you may have this year.

You can contact Elizabeth directly by phone at (905) 510-5785, by email at eblair@mortgageedge.ca or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Written by mortgagemississauga

October 22, 2008 at 1:47 pm

My mortgage is up for renewal – what are my options?

If you have just received your mortgage renewal statement, you may be in shock when you notice the drastic increase in the mortgage rates being offered by lenders. The 5-year fixed mortgage rate has jumped to almost 6% and is higher with some lenders. Even though the Bank of Canada has recently lowered its prime rate in October 2008, there is still a significant difference between the mortgage rates that you might have received 3 to 5 years ago compared with mortgage rates today. Even a variable rate mortgage, which was recently available at discounts of 0.85% to 1% below prime rate, is no longer available and will not likely return in this market. Today’s adjustable rate mortgage or variable rate mortgage is available at around prime rate PLUS 1%.

When you receive your mortgage renewal statement, it is important for you to know that you can always take your mortgage business to another lender and there is no “penalty” as long as you are not breaking your mortgage term prematurely. However, there are costs associated with just switching mortgage lenders, especially if you go shopping for a mortgage on your own. Here are the typical costs associated with just switching mortgage lenders:

1) Appraisal Fee: you may have to pay the cost of an appraisal when you switch to a new lender. Any new lender needs to know what the fair market value is, of your home, before they will agree to advance mortgage funds on it. Appraisal fees can be anywhere from $150 – $350 depending on the square footage of your home and these are always ordered by the lender so do not go out and hire an appraiser yourself.

2) Discharge Statement Fee: you will have to pay the cost that your lender will charge to prepare a discharge statement for your mortgage. Every bank charges a discharge fee if you leave them at the end of your mortgage term. The discharge statement fee can range from $150 – $300, depending on your lender.

3) Legal Fees – a new mortgage will have to be registered and you will need a lawyer to do this for you. The cost to register a new mortgage can be anywhere from $600 – $1,500 or more, depending on what you are having done.

Now typically, when you get a renewal notice from your lender (before your term is ending) and you do not like what you are being offered on renewal, let me recommend a couple of options: 1) you shop the rates yourself and go back to your lender and negotiate the rate with them directly; or 2) you call me and I will shop the mortgage rates out on the market for you. Because I deal with over 40 lenders, I can let you know if you are being offered the best deal. Once I find you a better mortgage rate, you can simply ignore your lender’s renewal “offer” and I can set up a new mortgage for you to take effect on your mortgage expiry date……it is that simple. I help clients switch their mortgages to a new lender all the time and it is a painless process.

Now if you are concerned about the “cost of switching”, I have a GREAT product just for that! One of my lenders will pay ALL of the costs typically associated with switching your mortgage:

1) your appraisal fee is paid;

2) the discharge statement fee is paid;

3) and the legal fees are covered.

So essentially, it is a NO COST switch that allows you to move your business without costing you a dime. Also, since I have the ability to negotiate discounts on your mortgage rate too, I can almost always guarantee a better rate than what your own bank is offering. Please contact me about 4 months prior to your renewal date, and I promise to give you the best service!

You can contact Elizabeth directly by phone at (905) 510-5785, by email at eblair@mortgageedge.ca or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Written by mortgagemississauga

October 21, 2008 at 10:17 pm

Planning for your first home purchase

If you are thinking of buying a house soon, here are some good tips to help you get started:

1. Begin saving cash for your downpayment. The higher your downpayment, The lower your mortgage obligation will be. You can also place saved funds into an RRSP, and then cash them out to use towards your downpayment. Remember that an RRSP will also give you some tax benefits each year, as you save. Seek out the assistance of a good financial planner to help you towards that goal.

2. All applicants on the mortgage should be using credit and be working towards building a credit history. Use credit, pay it off. Some examples of items that will develop your credit history are credit cards, line of credit, a car loan, a personal loan.

3. Always pay your credit card bills, utility bills and anyone who provides you services ON TIME. Remember that if you do not pay other companies, that may have provided services to you, and you owe money to them, those same companies could file “collections” against you for those monies owed and these collections are listed on your credit report. Removing collection items from a credit report is a lengthy and tedious process.

4. Avoid running up too many balances on cards or too much debt: A common one I see is car loans. Car loans are relatively easy to obtain, however, when it comes time to apply for a mortgage, and you have monthly payment obligations of $800 a month, it may greatly reduce your ability to qualify for a higher mortgage amount especially if you are carrying other debt obligations. I always tell first-time buyer clients, to go out and buy the least expensive well-maintained used car they can find, pay cash for it, and drive it around until after they buy and move into their house. After purchasing a house, they can then go out and take on a car loan and see what they can comfortably afford with the new mortgage obligation.

5. Do not sign up as a co-signer or guarantor for anyone else. If you do, you could be disqualified for a mortgage if you have a financial obligation to someone else’s debt. Even though you may only have co-signed, that debt obligation would have to be disclosed on your mortgage application and depending on what that amount is, you may not be able to qualify for the amount you need on your mortgage application.

6. Don’t switch jobs just before you apply for a mortgage unless you can wait out the probation period on the new job. If your new position does not have a probationary period, that would be fine with most lenders reviewing your mortgage application.

7. Be sure you understand the whole financing process when purchasing from a builder. Often qualifications are given by the ‘in-house’ lender at the builder’s office, but clients often walk away without ever really understanding what happens with their mortgage qualification in the long-term (18 months away or whenever their new home is built). I recently received a phone call from someone who made a deposit with a builder, over a year ago and was about to lose their deposit on closing date, because they could not qualify for their mortgage. The lender could not approve the mortgage loan since the client’s financial status had changed. Remember that a lender reserves the right to review all applicant’s financial status and if there is some substantial change in their financial status, right before closing date, the lender could refuse to fund the mortgage. Read the fine print of any contract you sign and understand that while you may have put down a deposit with a builder, the house is really not yours until your financing is affirmed.

This article was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785, by email at eblair@mortgageedge.ca or you can visit her website at: www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Written by mortgagemississauga

October 21, 2008 at 6:57 pm

House for Sale in Mississauga

OPEN HOUSE: 6324 Atherly Crescent, Mississauga, Ontario, CANADA.

Sunday October 24, 2010 from 2 pm – 5 pm

Realtors are welcome to bring their clients. Coffee and cookies will be served.

4 Bedroom, 2 full bathrooms.

Semi-detached. Walking distance to schools.

Close to the Meadowvale Town Centre.

Very large lot, mature trees and a lovely perennial garden.

Lot size is: 41 feet x 124 feet.

Newer windows, floors, and upgrades.

Partially finished basement. Parking for 3 cars. Very friendly neighbourhood.
High efficiency furnace and brand new central air conditioning installed in 2010.

Fantastic financing mortgage rate (for qualifying applicants) is also available.

Please call Elizabeth Blair at (905) 510-5785 to book an appointment or email me with any questions: eblair@mortgageedge.ca

Very Large 4 Bedroom Semi for Sale in Mississauga

Written by mortgagemississauga

October 20, 2010 at 12:28 pm

Posted in Uncategorized

Tagged with 4 bedroom, 6324 Atherly Crescent, best mortgage rates, for sale, Jeff Vella, land transfer tax, MLS, MLS Canada, MLS listings, mortgage insurance, mortgage rates, open house, open house mississauga, open house October 24, private sale, REMAX, Sam McDadi, Sutton

This incredible mortgage rate!

http://www.adstandards.com/en/standards/canCodeOfAdStandards.pdf

If you are shopping around for mortgage rates on the internet and notice some huge discrepancies on available “best rates”……beware.

A recent inquiry came from an individual who came across a mortgage brokerage advertising a 1 year fixed rate at 2.29%. I searched through my rate sheet, as well as other rate sheets I use to compare mortgage rates only to find that there really was no lender offering this rate nor was there any particular mortgage rate special being offered in the mortgage brokerage community.

Why would a mortgage brokerage advertise a rate that is really not available? The reason is plain and simple. Companies will sometimes do what it takes to make the phone ring and once they have you really interested in that offer, they might just get your business. Most mortgage brokerages who are guilty of this practice know exactly what they are doing. Follow me on an example of how this would be played out…… Once the mortgage brokerage receives a mortgage inquiry that leads to a mortgage application and a corresponding credit check, and receive all the relevant paperwork from the applicant, job letters, pay stubs, a notice of assessment, etc, the applicant is usually then encouraged to “avoid shopping around for a mortgage, as shopping around could negatively affect their credit score”. At this point, the applicant has fulfilled all of the lender’s requirements to get this “super great advertised mortgage rate” quoted on the website. But the bad news now comes out…….”oh so sorry, that mortgage rate, you saw, is no longer available as the lender has just changed their rate”. How can the applicant prove otherwise? After all, they do not have access to lender rate sheets, that the brokerage has, and there is always that small footnote, at the bottom of the website that you did not see……”mortgage rates are subject to change without notice”. An applicant who has already invested much time and effort, may just go ahead with the application resenting the thought of going through all of this painful application process again (and this is exactly what steps the brokerage planned to take you through when they advertised that mortgage rate, that really does not exist).

The practice of advertising a product (or a mortgage rate) that really is not available to the consumer is considered a “Bait and Switch” tactic. The practice of using Bait and Switch is forbidden by the “Canadian Code of Advertising Standards”. The advertising standards document can be viewed at this link:

What can you do to really ensure you are not being deceived by some “amazing rate” that you find that seems too good to be true? Research it and check it out against some other reliable sources like:

1. https://www.cannex.com/canada/english/

2. http://www.financialpost.com/personal-finance/rates/mortgage-closed.html

If you see no other brokerage that is even close to this advertised rate, that is probably a good indication that the rate you see on the website is set up to lure you in.

What can you do, if you think you have found misleading advertising? You should take the time to file a complaint. You can find the information and complaint process under the Competition Bureau website:

http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02776.html

This article written by Elizabeth Blair on August 25, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit any of her websites at:

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680

Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

Written by mortgagemississauga

August 25, 2010 at 7:06 pm

Land Transfer Tax / Property Transfer Tax in Canada

If you decide to purchase a property, in Canada, you will be required to pay a tax to the Ministry of Revenue/Finance, in the province where you are buying.

This tax is commonly referred to as the “Land Transfer Tax” or the “Property Transfer Tax”.

The tax is usually paid to the Ministry of Revenue, within the Province and the tax is calculated based on the fair market value of the property, using a certain formula. The formula used to calculate the land transfer tax portion varies greatly from province to province. I used Ontario’s formula, as an example. Here is how the Land Transfer Tax is calculated for a property purchased in Ontario:

The first $55,000 is taxed at 0.5%

The next $195,000 is taxed at 1%

The next $150,000 is taxed at 1.5%

And the remaining $250,000 is taxed at 2%.

So if you purchased a home for $300,000 in Ontario, your Land Transfer Taxes payable would be calculated as follows:

The first $55,000 is taxed at 0.5% or 0.005 * $55,000 = $275

The next $195,000 is taxed at 1% or 0.01% * $195,000 = $1,950

The next $150,000 is taxed at 1.5% or 0.015 * $50,000 = $750

And the remaining $250,000 is taxed at 2% or 0.02 * $0 = $0

The total Land Transfer tax payable is: $275 + $1,950 + $750 = $2,975

If you decide to purchase a property in Ontario, and within the City of Toronto, you will be required to pay an additional tax, called the Toronto Municipal Land Transfer Tax and this is calculated as follows:

The first $55,000 is taxed at 0.5%

The next $345,000 is taxed at 1%

And 2% on the entire portion over $400,000.

So using the above formula, a home valued at $300,000 will result in an additional tax of:

The first $55,000 is taxed at 0.5% or 0.005 * $55,000 = $275

The next $345,000 is taxed at 1% or 0.01% * $245,000 = $2,450

And 2% on the entire portion over $400,000 is taxed at 0.02 * $0 = $0

The total Toronto Municipal Land Transfer Tax payable is: $275 + $2,450 = $2,725

Land Transfer tax payable $2,975 + Toronto Municipal Land Transfer Tax payable is $2,725 = $5,700 !!

I decided to do some research to just compare all of the provinces and territories to see which provinces/territories had the highest and which provinces/territories had the lowest land transfer taxes.

The table below is based on a $300,000 purchase price and the data was collected as of July 31, 2010.

I was very surprised (well actually not) that the results show Ontario (Toronto buyers) are paying the HIGHEST land transfer taxes, compared to any other city in the country!!

Provinces and Territories	Estimated Land Transfer Tax Payable
Home Purchase Price = $300,000
Ontario (city of Toronto area*)	$5,700
Nova Scotia (Halifax county)	$4,500
British Columbia	$4,000
Manitoba	$3,150
Prince Edward Island	$3,000
Quebec	$3,000
Ontario (not the city of Toronto)	$2,975
Newfoundland	$1,250
Saskatchewan	$915
New Brunswick	$805
Yukon	$750
Northwest Territories	$490
Alberta	$335
Nova Scotia (not Halifax county)	$150

Information gathered as of July 31, 2010. This information is not guaranteed and therefore should not be relied upon without verification. E.&O.E. * Those who purchase in the City of Toronto, are also required to pay the Toronto Municipal Land Transfer Tax

This article written by Elizabeth Blair on July 31, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit any of her active websites at:

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680

Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

Written by mortgagemississauga

July 31, 2010 at 6:34 pm

Buying a home, renting it all out, or just a portion of it

Buying a home, renting it all out, or just a portion of it

I have run into this question a few times, over the years, and decided that I should sit down and write about it. When you purchase a home, as the mortgagor, you will come across some questions around whether the home you are buying is going to be your primary residence (you will be living there yourself) OR whether you have intentions of renting out ANY portion of the house.

1. Is this your primary residence?

This question will be asked of you, at the mortgage application stage. It is important to specify exactly what your intentions are with this new home you are buying. If you are planning on renting out the home, you must state this. Your answer will determine how your mortgage application is underwritten. If you purchase a home and it will be your primary residence, you may purchase a home in Canada with a minimum down payment of 5%. However, if you purchase a home and have intentions of renting it out, your down payment must now be 20% per Department of Finance new borrowing guidelines introduced on April 19, 2010.

The question will also be asked of you, at the lawyer’s office. The lawyer will require you to sign a legal affidavit stating that this is your primary residence and it is not intended for use as a rental property. If the client even hints that they will be renting out any portion of the house, the lawyer cannot and should not commission the affidavit.

2. Is ANY PORTION of the house to be rented out?

This statement will appear in your mortgage commitment and applies if this is your primary residence. You may be wondering why would it be a concern to my lender if I decide to just rent out a PORTION of my house?

Here is likely the most apparent reason why a lender would not allow this. Should the mortgage go into default, how quickly can they (the lender) get a tenant out of the house, as opposed to the owner? At one time, when someone was about to go into default, they might immediately sign a lease with a friend and then the mortgagee would have to go through a cumbersome process to evict them. While it is now easier to evict a tenant, there is always concern about delays that might occur getting a tenant out. Also, it is important to mention, that since the tenant does not own the home, they may not take the same care of the property, that an owner would.

In summary, some very important things to consider:

If you purchase a home, and you have indicated that it is your primary residence, the lawyer is instructed, by the lender, to prepare a legal affidavit stating that this is your primary residence and that you do not have intentions of renting out the home. Remember that if the borrower even hints that they will be renting out any portion of the house, the lawyer CANNOT commission the affidavit.

Also remember that if this is your primary residence you should not even rent out a PORTION of your home UNLESS you have notified your lender. If your lender finds out, EVEN IF you are not in default on any other provision, there will most certainly be a default coming if you do not disclose the new rental arrangement and the lender finds out. You may be thinking, well how can the lender find out…….easier than you think. A disgruntled neighbor, family member, or even worse, your tenant! I recently met a mortgage applicant who shared their intention of reporting their current landlord for renting out an illegal basement apartment to them as a way of retaliating for raising the rent! So a word of caution if you are thinking of doing this or even are in this situation now…..lenders can find out.

Be absolutely sure to disclose up front, to the bank, or your broker, exactly what your intentions are with the property at the time you are planning to buy, OR, if you make any changes to your plans after you move in.

This blog post was written by Elizabeth Blair on June 24, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit any of her websites at:

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680

Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

Written by mortgagemississauga

June 24, 2010 at 8:26 pm

Get CASH to break your fixed rate mortgage

If you are wondering about the recent drop in variable mortgages, there might be a great solution for you available. Now, you can get some cash on closing day to help you cover some of the mortgage penalty you may be facing, if you break your fixed mortgage prematurely.

Here is what you can expect to receive on a cash back, if your mortgage balance is $300,000:

Mortgage Amount	$300,000.00
Mortgage Rate	120 day closing	Cashback on closing day
2.20	0.72%	$2,160.00
2.15	0.60%	$1,800.00
2.10	0.48%	$1,440.00
2.05	0.36%	$1,080.00
2.00	0.24%	$720.00
1.95	0.12%	$360.00
1.90	3.80%	$0.00

Illustration above is based on a $300,000 mortgage balance.
Mortgage rate listed here is effective on June 11, 2010
Note that mortgage rates are subject to change without notice This blog post was submitted by Elizabeth Blair on June 11, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area. You can contact Elizabeth directly by phone at (905) 510-5785 by email at eblair@mortgageedge.ca or you visit her websites at: http://www.missmortgage.ca http://www.burlington-mortgage.ca http://www.oakville-mortgage.com http://www.streetsville-mortgage.ca Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 / Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

What is a Covenantor or Guarantor on a mortgage?

Here is a description of the covenantor and guarantor position, as it relates to a mortgage application.

The key difference between a “covenantor and a guarantor” are:

Covenantor: is on property title, and is also on the mortgage application.

Guarantor: is NOT on property title, but is on the mortgage application.

Both of the above (depending on what position is chosen) would be on the mortgage application. Covenantor or Guarantor are added onto the application and would have to disclose all the same information just as the primary applicant(s) would, for example:

1. legal names

2. address

3. disclosure of all assets owned, mortgage, value of home, etc.

4. disclosure of all debts held

5. credit report must be retrieved

6. employment history

7. employment income

From the mortgage lender’s perspective, the covenantor or guarantor position, actually helps to give some “strength” to the application, however, the covenantor or guarantor’s income is not used to actually “Qualify” the primary mortgage applicants.

It is important for the covenantor or a guarantor to understand that if the primary borrower(s) should ever default on the mortgage, the covenantor or the guarantor would be financially responsible to pay the mortgage payment(s) to avoid issues which would arise from non-payment of a mortgage obligation. It is also important to note that the covenantor or guarantor’s financial status is assessed to determine whether they could feasibly be able to carry the mortgage application, in the event that the primary applicant(s) could not continue making the mortgage payments.

This article was written by Elizabeth Blair on June 11, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her websites at:

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680

Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

Fed up with telemarketing calls!

https://www.lnnte-dncl.gc.ca/index-eng

Fed up with telemarketing calls so I finally did it…….. I picked up the phone and called the CRTC to make a complaint about an unsolicited telemarketing fax I received last night on my fax machine. A telecom company decided to fax me one of their marketing ads which annoyed me.

A few years ago, the CRTC (Canadian Radio Television and Telecommunications Commission) set up the “National Do-not-call Registry” in Canada which is an online tool where individuals can register their telephone numbers on this registry. This tool became available after Canadian Government passed Bill C-37 and it became law empowering CRTC to issue fines on those who violated the do-not-call rules. I remember when I first heard about this tool, I pounced on the opportunity immediately to register my numbers.

Once listed on the registry, a telemarketer should not contact you to solicit your business or money. Now there are some exceptions on those who can call you and these are charities, newspapers, political parties seeking your support, or a business where you already have had recent consumer transactions. Once you register your telephone number, it takes 31-days, after you register your telephone number, and after the 31-day period, telemarketing companies, other than those listed above, cannot call your number and if they do, they can face fines if you register a valid complaint. Note that the registration of your telephone number is only valid for three years, so after three years, you should call the National do not call registry to re-register your phone number.

To register your number on the registry in Canada, go to this website:

So the process was easy. I called 1-866-580-3625 begin_of_the_skype_highlighting 1-866-580-3625 end_of_the_skype_highlighting begin_of_the_skype_highlighting 1-866-580-3625 begin_of_the_skype_highlighting 1-866-580-3625 end_of_the_skype_highlighting end_of_the_skype_highlighting and spoke to a very helpful lady, who asked me a few questions:

1) what number did the telemarketer call me at?

2) what is the name of the business, and the phone number of the business that called me?

3) what was the date that the telemarketer contacted me?

And, to top it all off….I received a faxed document – perfect printed “evidence” !!!

She then gave me a unique ID code number, which I was to write across the fax transmission I received, and then she asked me to fax that document I received to this number: 1-888-362-5329 begin_of_the_skype_highlighting 1-888-362-5329 end_of_the_skype_highlighting begin_of_the_skype_highlighting 1-888-362-5329 begin_of_the_skype_highlighting 1-888-362-5329 end_of_the_skype_highlighting end_of_the_skype_highlighting. She then advised me that any future calls or faxes I received from telemarketers, must be called in and registered separately as they assign a unique ID code to each call or fax……….. Easy!

We have family, in the United States, and we were told that the Federal Communications Commission (FCC) Do Not Call Registry, has hefty penalties for telemarketers who do not comply. I found a good example of that — AT&T was fined $780,000 for failing to comply with the Do Not Call Registry. Wow, $780,000!!!……don’t mess with the US or at least don’t mess with the US FCC!! Here is a link to the article – I’m not sure if the fine was ever collected, but I hope it was.

http://www.allbusiness.com/legal/consumer-law-telemarketing-regulation-do-not/10221784-1.html

Somehow the CRTC in Canada is just a little weak in the area of imposing penalties to telemarketers who call those who have registered their numbers with the do-not-call list. Canadian companies, who still wish to bother us with their telemarketing calls, have found ways to get around the rules by outsourcing their telemarketing calls to overseas companies…..now that I have followed through on the complaint process, I will be sure to ask some questions to find out who the Canadian company is and what their local number is, so that I can follow through with a formal complaint.

The CRTC in Canada has, what I would consider, “wimpy” penalties especially since consumers need assurance that offending companies really do get the message and avoid calling those who do not wish to be called. For example, in Canada, if found guilty, an individual can be fined $1,500 whereas a corporation can be fined up to $15,000 for each violation. It seems the number of fines issued is also very minimal relative to the actual number of reported telemarketers in violation – see this link:

http://www.crtc.gc.ca/eng/dncl/status-etape.htm

Sorry fellow sales friends, but I’m going to have to tell you that its not the way we should be getting business anymore. Too many people are just simply fed up with telemarketing calls.

© 2010 This blog was written by Elizabeth Blair at Mortgage Edge on March 23, 2010. Elizabeth Blair services mortgage clients primarily in Mississauga and all over the Greater Toronto area You can contact Elizabeth directly by phone at (905) 510-5785 begin_of_the_skype_highlighting (905) 510-5785 end_of_the_skype_highlighting begin_of_the_skype_highlighting (905) 510-5785 begin_of_the_skype_highlighting (905) 510-5785 end_of_the_skype_highlighting end_of_the_skype_highlighting by email at eblair@mortgageedge.ca or you visit her website at:

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 / Brokerage Lic # 10680. Head Office: Park Place Corporate Centre, 15 Wertheim Court, Suite 210, Richmond Hill, ON, L4B 3H7, Canada.

Changes to Insured Stated Income programs

Borrowing Guidelines for Insured Stated Income Programs in Canada are about to change

The borrowing guidelines for insured Stated Income Programs are about to undergo some major changes and these changes will be implemented effective April 9, 2010.

The changes are being announced by CMHC (also known as Canada Mortgage and Housing Corporation). CMHC’s changes, as well as those announced by Finance Minister Jim Flaherty effective on April 19, 2010 are all attempts to help cool off the heated housing market which is now being driven by record-low interest rates. More importantly, these new measures are required to protect borrowers from taking on more debt than they can afford especially as interest rate hikes are imminent. While Canada still allows Stated Income programs here, they are becoming very rare in the U.S. The massive number of defaults and foreclosures reported by the U.S. after the 2008 credit crisis were attributed mostly to Stated Income programs that were used to place under-qualified borrowers into mortgage loans that they could not afford.

While Canadian lenders continue to use the Stated Income programs here, customized for commissioned and self-employed borrowers, CMHC will now be scrutinizing those same applications using tighter underwriting criteria making the CMHC Self-Employed mortgage insurance program a little harder to access.

What exactly does Stated Income mean?

Stated Income means exactly that. When a mortgage application is created, for a self-employed or commissioned applicant, and the entire income amount is not verifiable in traditional documents, for example a Notice of Assessment, the applicant may apply under the Stated Income program to allow an income adjustment to help qualify them for a home purchase or re-finance. A real example might look something like this:

Mr.Thomas works as a Systems Analyst in Toronto. He is purchasing a house based on his earnings alone as his wife is currently not working. He earns $77,000 gross annually and his employment status is considered self-employed as he works as an independent contractor and bills the company directly for his time. He is not on payroll. He has worked in various departments for this same government organization, as a Systems Analyst, for the last two years. To buy the home they want, this couple would need an income of $85,000 to qualify for the purchase. On a traditional mortgage application, the couple would be declined and would not be able to purchase the home. However, by utilizing the Stated Income program, the couple can qualify to buy this home with a 5% down payment and the income placed on the application would be “stated” on the application at a higher amount. The couple has no other savings or funds available to them. The income to qualify the applicants, would be entered at the amount of $85,000 instead of his actual income of $77,000, in order to qualify the buyers.

Here is an outline of the changes that will be implemented on any applications called Stated Income applications which pass through CMHC as an “insured” mortgage AFTER April 9, 2010 and how these changes would affect the particular applicants described above:

1. Downpayment: those who are purchasing a home, and who have applications classified as a Stated Income application, will be required to put down 10% rather than the 5% minimum required today.

Mr.Thomas and his wife, after April 9, 2010 must have a down payment equal to 10% of the purchase price, along with enough funds to cover closing costs.

2. Tenure: those who have been working in the same business for greater than three years, would not be eligible for the Stated Income program and therefore those in this category would have to provide proof of their income, for example, a Notice of Assessment.

Because Mr.Thomas had only been working as a Systems Analyst for the past two years in total, they could still apply under the Stated Income program and be eligible. Had Mr.Thomas been working three years and 6 months, as a Systems Analyst, they could not qualify for the home they wanted.

3. Documents: documents will be requested and viewed by the lender to help determine the length of self-employed which are not always requested today. The documents a lender may ask for: a business license, proof of GST registration, articles of incorporation (if incorporated).

4. Commission: those who are collecting commission would no longer be eligible for the Self-Employed program.

Mr.Thomas is not paid on a commission basis, therefore, after April 9, 2010, he could still utilize the Stated Income program.

5. Limits: a re-finance will be limited to 85% loan-to-value instead of the current limit of 90% used today.

If Mr.Thomas decides to re-finance his home, in the coming years, while he is within the insured status range and assuming self-employed income is still their primary income, they will only be able to re-finance up to 85% of the value of their property.

It is important to mention that these program changes only affect those mortgages that are “insured” by the lender therefore, those mortgages that are not insured, could be reviewed differently from lender to lender and each lender would specify their underwriting criteria on a case-by-case basis.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680. Head Office: Park Place Corporate Centre, 15 Wertheim Court, Suite 210, Richmond Hill, ON, L4B 3H7, Canada.

Value of Home Improvements

http://component.aicanada.ca/e/resourcecenter_renova_all.cfm

You may be thinking about those spring-time projects that you will need to tackle this year, like landscaping the garden, rebuilding a patio or fence, changing older windows and doors, a new roof, or even remodeling your basement, kitchen or bathroom. If you tune in to some recent popular TV programs like “Extreme Makeover – Home Edition”, you will surely catch the home makeover bug. If you live in a freehold house, you should be spending an average of 1% of your home value annually, on maintenance, just to keep it in good repair and to prevent it from declining in value, according to “Home Buying for Dummies” by Eric Tyson and Ray Brown.

Renovating a home, may also be an important consideration for you in 2010, if you are thinking of listing your home for sale. Remember that the right renovations can help you to maximize the resale value of your home. The renovation payback statistics were extracted directly from the Appraisal Institute of Canada’s website and the data is current as of January 2010:

To see the table, please click on the link:

renovations table

You can check your renovation investment plans using the Appraisal Institute of Canada’s on-line tool. The name of this tool is RENOVA and it is an excellent resource for homeowners. You may visit the site by going to this website:

Remember that the referenced website link is only a guide, and you should always carefully consider that proper appraisal values and returns can be provided by an accredited appraiser holding a CRA or AACI designation. It is also important to mention that an appraiser will also assess other factors, about the home to complete accurate appraisal results, for example, the neighborhood, recent real estate activity, lot, location, etc.

Canada AM has been running an informative real estate market series that commenced on January 25, 2010. Featured on Tuesday’s program was Mr. Ed Saxe of Edjline Appraisal Services. Mr. Saxe is a certified Canadian Residential Appraiser as well as the President of the Ontario Association of the Appraisal Institute of Canada. Mr. Saxe discusses that the number one investment returns come from kitchen and bathroom renovations, however, as a homeowner, he advises that discretion is required when spending. Mr. Saxe advises homeowners to carefully consider just how much they are spending and where they are spending. For example, he mentions that you would not be wise to spend $50,000 on a kitchen renovation if you are living in a home that is only worth $200,000. A home renovation should be relative to the market and the neighborhood in which you live. You can view the current live video clip at the following link:

http://watch.ctv.ca/news/top-picks/added-value/#clip259603

This blog was written by Elizabeth Blair of Mortgage Edge.

Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: http://www.missmortgage.ca

Lic # M08005880 / Brokerage Lic # 10680

The Evil IRD Penalty