Monday, July 26, 2010

A peak into Canada's Housing History

With more than 2/3 of Canadians now owning homes, it's difficult to imagine a time when mortgages were not yet invented - and flush toilets were a luxury. In The Canadian home: from cave to electronic cocoon, Marc Denhez does a great job of recounting mortgage and real estate history in this fair land. Below are a couple tidbits:
-In eleventh century England, you could buy a home in one of two ways. The first - and simplest - was to simply pay cash. If you wanted to finance a home, you could pledge collateral (for example, your sword and horse). The problem was, the pledge was only valid for the lifetime of the borrower. When the borrower died, the collateral would be returned to the individual's heirs and the lender would be left with nothing. Enter the dead pledge which would remain valid after an individual died.
-In the days immediately following WWII, when the government decided to offer subsidized housing through what is now known as the CMHC, only half the homes had flush toilets. When suburban housing communities came into vogue following World War II, the term "street" became passe. The winding, maze-like communities required more descriptive street names - hence the terms "crescent", "circle", "drive", "terrace" and "court" (among others) came into being.

-article provided by Axiom Mortgage Partners

Tuesday, July 20, 2010

No surprise here!

As expected, the Bank of Canada announced a rate hike earlier today by 0.25%. This rate hike was predicted by many industry experts and I don't think anyone is all that surprised.
The next Bank of Canada rate announcement is scheduled for September 8th 2010.
Here is a CBC article on the interest rate announcement:
http://www.cbc.ca/money/story/2010/07/20/bank-canada-interest-rates.html

Friday, July 16, 2010

A Guide for Mortgage Virgins

The Globe and Mail has posted a good short video featuring Douglas Melville, Canada's Ombudsman for Banking Services & Investments. The video describes 5 important points a mortgage virgin should consider before signing on the dotted line!

1. Term of Payments: How long do you want to be in the home and how frequently do you want to make payments? The vast majority of mortgage lenders will allow you to make weekly, bi-weekly or monthly mortgage payments, however, some exceptions apply. Make sure you ask your banker or broker what payments frequencies are available!

2. Type of Rate: Do you want a fixed or floating mortgage? How risk averse are you? Mortgages are not a one-size-fits-all kind of deal. Some borrowers may be very comfortable with having a mortgage payment that fluctuates while others can sleep better at night if they know they have a locked in rate.

3. Privileges & Penalties: Do you plan on making extra payments on your mortgage? Different mortgage lenders have different pre-payment privileges. It's important to know how much you can pre-pay without penalty every year and how the mortgage penalty is calculated should you wish to pay off your mortgage before your term is up.

4. What if you move? It's important to know if your mortgage is portable to a new property or not. Even if you aren't planning to move until your term is up it's important to have the facts. Life has a history of throwing curve balls and you never know what's in store for you down the road.

5. Insurance: you don't have to get life insurance when you get a mortgage. It is a good idea but is, ultimately, optional. You certainly don't have to take the life insurance offered by your lending institution. You are free to shop around to find the best life insurance option for you!

Click HERE to watch the full video!

Thursday, July 15, 2010

Mortgage Tip: Purchase Plus Improvements Mortgage

Did you know that CMHC recently reported that 20% of borrowers take on additional consumer debt after closing on a purchase? Many of these borrowers are using this additional debt to complete home improvements. Instead of purchasing a home and racking up unsecured debt to pay for home improvements, why not include the cost of the home improvements into your mortgage?
I have the ability to set up a purchase plus improvements mortgage. It’s easy to set up and will allow qualified purchasers to finance the costs of immediate renovations or improvements through their mortgage!
In order to utilize this program you must submit written quotes of the work to be completed. Once you take possession of your new home you will usually have 90 days to complete the work. Once the work is complete and you have paid the invoices you can submit the receipts to your lender who will then advise your lawyer to release the funds to you. An inspection may be required by an appraiser to confirm that the improvements have been made.
This program has worked really well for some of my clients. I have had clients that wanted to a finish a basement and used this program to fund their basement renovations, I have also set up purchase plus improvement mortgages for people who needed to install a new furnace, flooring, and kitchens etc!
If you’re thinking of buying a fixer upper, speak to me first!
CMHC's Purchase Plus Improvement Mortgage Guidelines:
http://www.cmhc.ca/en/hoficlincl/moloin/hopr/upload/CMHC-Improvement.pdf

Friday, July 9, 2010

Do you know what's on your credit report?

Many people don't and it's a bad time to find out there's something wrong when you're in the middle of an offer on your dream home. You could find out that your score is too low or that there is an inaccuracy on your report that can't be fixed in time for you to buy the property. An inaccuracy on a credit report could take weeks, maybe months to rectify.
I've seen it happen and it just plain sucks.
I often advise my clients to obtain their credit report once a year, just so they know what's on it and can fix any mistakes. Equifax allows you to request a free credit report. You'll need to fill out a form, provide some information and in a week or so you'll receive a report in the mail, free of charge.
Here's the link:
http://www.equifax.com/ecm/canada/EFXCreditReportRequestForm.pdf
If you're a little impatient and don't want to wait you can pay to request your report online immediately. I’ve always found the free version to be sufficient.
If you do happen to find a mistake on your report, here’s the link with instructions on how to rectify the issue. https://www.econsumer.equifax.ca/ca/view/common/dispute_process.jsp