All About Real Estate, Finance & Mortgages

The secret board of MPs that manages internal House of Commons affairs is allowing MPs who own a house or condo in Ottawa as their second home to pay down their mortgages with a $75 per diem intended for meals, the Citizen has learned. The per diem is in addition to a $25 daily accommodation allowance MPs receive year-round if they own a second house or condominium in the capital, and using it to buy a home is allowed despite a rule forbidding mortgage payments from a separate $24,000 expense allowance. Combined, the per diem and the accommodation allowance could add up to $17,225 a year for house costs and mortgage payments if an MP spends only four days a week in Ottawa while Parliament is sitting. The $25 daily accommodation allowance is available without receipts throughout the year as long as the MP does not rent out the residence. The move outraged John Williamson, head of the Canadian Taxpayers Federation, who noted parliamentarians last week defended a $4,000 hike to the genera...

MONEY 401 Those who want to be left alone to follow their own desires should look elsewhere, Condo living requires flexibility, co-operation and compromise... words you don't see often in developers' ads. It's not the right place for you if you want to be left alone to follow your own desires. Moving into a condominium development means obeying its rules, even if you disagree with them. You may have to leave your cat or dog behind. You may be restricted from putting decorations on your front door. You may be prohibited from renting out your unit for short periods. These rules make sense in terms of avoiding conflicts among people trying to live closely and peacefully together. Short-term rentals, for example, can be disruptive to long-term owners. 'If tenancies of under six months are permissible, you risk buying into a building that is really just a disguised hotel,' says Keith Bricknell, a condo owner in downtown Toronto. 'You will never really get to know o...

By Douglas Hunter (Cottage Life Books, $35) Never having owned a summer home, but having enjoyed many visits to cottages owned by friends and relatives, I didn't realize all the possible pitfalls. This book explains them. Heavy emphasis is placed on the income tax aspects for both buyers and sellers. If the book has a flaw, it is that author Douglas Hunter is Canadian and he constantly over-emphasizes the Canadian taxation and ownership laws. However, most of the book applies to buyers and sellers of virtually all vacation cottages. Approximately half of the book is devoted to locating a suitable area for acquiring a cottage. After the search narrows, Hunter explains details of what to look for because buying such a property is much different than purchasing an urban house or condominium. Unique methods of financing the purchase of a vacation cottage are explained, but without great detail. Hunter suggests contacting local mortgage lenders. He explains the tax consequences of deduc...

Owning your own home is the great Canadian dream, and a wide range of mortgages means almost everyone can choose the debt that suits them best Attitudes to debt have changed over the generations as real estate prices have skyrocketed in Greater Vancouver and the rest of B.C. While survivors of the Great Depression worked to be mortgage-free, many younger people have been anything but reluctant to borrow money to finance the home they have always dreamed about. Lindsey McDonald bought her first real estate in Cloverdale two years ago when she was 22. The ambitious student sees her mortgage as an opportunity to build wealth and expects to sign up for more and bigger loans in the years to come. In contrast, John and Joan Ross bought their first home in 1959 and 'survived and sufficed' to become the mortgage-free owners of a bigger home on Vancouver's west side by the end of the 1970s. As children of the Great Depression, the two seniors have avoided significant debt ever since...

Canada Mortgage and Housing Corp. recently announced moves that critics say will drive many home buyers to the poor house, as it were, and could leave Canadian taxpayers on the hook. CMHC is offering mortgage insurance for interest-only loans and on amortizations up to 35 years, while also scrapping the typical $165 application fee on high-ratio loan products for people with less than 25-per-cent down payment. With an interest-only loan, a borrower can pay interest only for the first 10 years, then pay both interest and principal. Payments are initially low, but since the entire loan must still be paid off within the original amortization period, payments balloon as the principal starts being paid down, and again if interest rates rise. The first issue is whether a government agency like CMHC should be competing with private companies like Genworth Financial in the business of offering mortgage insurance on interest-only loans. If CMHC has to pay out a rash of defaults, the money will ...

A correction in the red-hot Toronto area condominium market 'cannot be far away,' says a leading housing economist. Buying for investment purposes in the Toronto market has been 'far in excess of market needs' and buyers face 'very high risks,' said economist Will Dunning in his most strongly worded analysis yet of the Toronto market, released yesterday. Nearly a decade into a robust housing cycle, high-rise sales remain extremely strong, with second quarter sales at an annual rate of 20,800, a record high, said Dunning." While other housing economists have expressed concern over what they see as a potentially frothy condo market, Dunning, a former Canada Mortgage and Housing Corp. economist, has been among the most conservative. Price appreciation for condos continues at a good clip — 5.9 per cent year over year — and the average condo rent has increased 2.1 per cent. But this won't last long, according to the gloomy forecast. "An onslaught of con...

(Jul 28, 2006) It happened to Susan Lawrence. While going through proceedings to sell her home earlier this year, the area woman learned that she had become the victim of fraud, joining a growing number of Canadians who have been victimized by real estate title fraud. "I went to the bank to discuss my mortgage because of the pending sale," says Lawrence, who has lived in her home for almost 30 years. "I found out my mortgage had been discharged and a new fraudulent mortgage assigned to my house at another bank without my knowledge. I couldn't believe it. I had heard of mortgage and real estate fraud, but never thought it could happen to me." The scam occurred as follows: someone unknown to her forged her signature, discharged her existing mortgage, took out a new mortgage for almost $300,000, pocketed the money, then defaulted on the mortgage and disappeared. Ms. Lawrence believes her nightmare started when a For Sale sign went up on her front lawn, giving fraud...

It looks like your dream house on the outside, but a few weeks after you move in, you discover mice, electrical problems or asbestos. Like a scene out of the 1986 comedy, The Money Pit, the beautiful house you were excited to move has now become a financial burden. This is the case for some new home buyers who don't cover all their bases by doing research before moving into a new home. Hiring a home inspector is a part of the home buying process that is optional, but may save numerous headaches down the road. Continued...

Canadians continue to favour home ownership over renting despite rising home prices and modestly higher interest rates, according to the results of a study released today by Scotiabank, which indicates that 30 per cent of Canadian renters plan to purchase a home within three years. "Steady job and wage gains continue to support Canadians who want to make the move from renting to owning," said Adrienne Warren, Senior Economist, Scotia Economics. "Many potential new homeowners, however, will look to less expensive housing options such as townhomes and condominiums due to some erosion in overall affordability." Despite the optimistic view of homeownership, current renters who are not planning to buy, outlined a number of deterrents to purchasing a home. The study found the most commonly cited reasons include: commitment of ownership (37%), high cost of real estate (17%), living paycheque to paycheque (12%), poor credit (7%), and student loans (5%). Continued...

Mortgage rate peak near economists: 'The end's not far away' The short-term outlook for inflation and interest rates in Canada is a whole lot less clear since Friday's jobs report that signalled the economy is hotter than expected, but the long view is that borrowing costs and the pace of price increases are approaching their apex. After Friday's report that Canada created almost 100,000 jobs last month, the Canadian dollar has shot up almost US2 cents to US91 cents in the past two trading days on bets the Bank of Canada is not done raising interest rates to corral inflation, and probably has one more quarter-percentage-point increase to go. That's a change from earlier last week, when the expectation was that the central bank's trend-setting target for overnight interest rates wasn't going any higher than the 4.25% it is now. "If we are not done watching the Bank of Canada raise interest rates, we're 25 basis points from it, so the end's no...

Only 10% Understand Real Estate Lawyer's Role Many Ontarians have jumped into the busy real estate market without fully appreciating the legal dimensions of home buying. Homebuyers put a great deal of time and energy into finding their dream home. Real estate lawyers put the same careful attention into investigating the legal issues related to the property and closing the sale," says Kathleen Waters, an experienced real estate lawyer and Vice President, TitlePLUS. "That's where your real estate lawyer becomes an invaluable resource: he or she navigates you through the major legal implications of home purchase, and can help prevent a dream home from turning into a nightmare." Continued...

Homeowners can expect to another half percentage point interest rate hike over the next year, says the chief economist with the Canadian Institute of Mortgage Brokers and Lenders. Will Dunning said that increase might take a little of the heat out of the real estate market, but he doubts it would be enough to cause prices to fall. New home sales are strong, prices are continuing to rise and the new housing starts are either growing slightly or remain flat in most parts of the country, he said. Speaking at a mortgage symposium in Halifax Monday, Mr. Dunning said fixed rates remain the most popular mortgage choice for homeowners, but the heavily promoted combination fixed rate/variable rate mortgages are gaining in acceptance as people looking at the uncertainty in the marketplace see them as a way of managing the risk. Drawing on the results of a survey he carried out in March, he said most people renewing their mortgages are happy with their situation, generally because their payments ...

Going crossed-eyed over the myriad mortgage options these days? Don't despair, says a local real estate expert and author. With the right knowledge, research and professional team backing you up, there are some great deals to be had, says Douglas Gray, president of National Real Estate Institute Inc, and author of Mortgages Made Easy: The All-Canadian Guide to Home Financing. And it all starts with proper preparation, including doing an online credit check to make sure your financial affairs are as they should be, and knowing how much a lender will potentially grant you, Gray says. His No. 1 piece of mortgage advice: Don't deal directly with lenders, but work with a mortgage broker who can seek out the best deals from up to 100 different lenders. 'They know all the big players, and who's hungry - and you don't pay a penny to the mortgage broker,' says Gray, who also advises homebuyers to do a little comparison-shopping, and talk with at least three different bro...

Personal bankruptcies have fallen to the lowest level in seven years, cushioned by a strong labour market, Canadian Imperial Bank of Commerce said Monday. Bankruptcies, on average over the past three months, fell 7.6 per cent from last year but – like most economic reports of late – the headline number masked regional discrepancies. In Alberta, they tumbled 17.5 per cent, while bankruptcies in Quebec and Atlantic Canada rose 3.6 per cent and 1.8 per cent, respectively, CIBC said in its bankruptcy report. At the same time, Ontario bankruptcies are falling as strength in Ottawa, Toronto and Kitchener offsets higher rates in Sudbury and Windsor, cities more vulnerable to the strong Canadian dollar. “Looking at development in the pipelines, it appears that there is little risk of any significant deterioration in the bankruptcy situation in the near future,” CIBC economist Benjamin Tal said in the report. In one barometer that shows fewer people are likely going belly up, the delinquency ra...

A recent forgivable loan from the Canadian Mortgage and Housing Corporation (CMHC) will ensure that residents of the Homewood Mansions near Carlton and Jarvis streets can continue to live in safe buildings. The CMHC has passed down $762,000 in funding for the 67-unit rental apartment at 1 Homewood Ave. and $528,000 for a 44-unit rooming house at 7 and 9 Homewood Ave. The money is part of an initiative to help ensure that Toronto maintains a certain number of affordable housing units. "Part of the review we do before giving out funding is to determine if, in fact, the tenants are lower-income earners and if, in fact, the rents are kept below a certain level," said CMHC spokesperson Mark Salerno. "We want to ensure that the buildings remain safe to live in and that we retain an affordable housing stock in the city." While the funding comes in the form of a loan, Salerno said that the CMHC will forgive the loan provided certain conditions are met. First, the money must...

Two days after the Bank of Canada raised short-term interest costs, the Canadian Imperial Bank of Commerce (TSX: CM) said Friday it is trimming its posted mortgage rates. Among the changes, CIBC's one-year closed rate slips to 6.25 per cent from 6.30 per cent, while the three-, five- and 10-year rates each decline by one-fifth of a percentage point, to 6.45 per cent, 6.75 per cent and 7.55 per cent. The bank's move followed Wednesday's quarter-point increase in the prime lending rate to six per cent at all the major commercial banks, after the Bank of Canada raised its overnight rate to 4.25 per cent from four per cent. While it increased the cost of short-term money for the seventh time since last autumn, the central bank also signalled that its series of hikes is likely over. On bond markets, where banks fund their mortgage obligations, the Canadian yield curve flattened this week, as would be expected after the central bank's increase at the short end. 'Interesti...

"Unlike the United States, motor fuel prices are a sleeper issue here in Canada. At least politicians, at both the federal and provincial levels, are sleepwalking through it. Stateside, it's one of the three key issues gripping the U.S. mid-term elections (illegal immigrants and Iraq being the others) and threatening to oust the Republicans from the House and Senate, ruining George W. Bush's final two years in office. It may be resting peacefully in the minds of the politicians here, but Canadians are wide awake on how they are getting hosed at the pumps. Serious discontent According to a damning - if you are an oil company or elected official - Ipsos-Reid poll released yesterday, there's a serious mood of discontent out there. That's even true in Alberta, where high energy prices bring mega-millions into the provincial treasury and have touched off the largest energy boom in the province's history. Albertans seriously resent the high cost of gas and diesel. So...

The strong dollar has Canadians snapping up properties in Point Roberts. Out of all my buyers this month, 50 per cent were Canadian, says Paul Rush of the Points National Real Estate, via telephone. Ive had an increase in Canadian buyers in the last two to three months, prior to that it was mostly US buyers. Canadians are strictly going by the exchange rate and they know (Point Roberts) is close. Waterfront properties, after all, may seem more affordable in the U.S. as the going price is about $10,000 per foot (measured along the shore). Small beach-front properties are selling for US $550,000 to $600,000 although at least one luxurious home is selling for US $1.6 million. In Tsawwassen, however, RE/MAX manager Bob Cooke could find only two listings for waterfront homes and the cheapest was $1.7 million for 3,500 square feet and a 35-foot shoreline frontage, looking west. Views are anywhere from $1 million to $2 million, Cooke says. Waterfront starts at about $1.8 million. I think ther...

Renovation market also staying strong May 20, 2006. 01:00 AM More than 380,000 households in major Canadian cities indicated they were ready to buy a home this year, according to a survey released this week by the Canada Mortgage and Housing Corp. The results of the CMHC's Consumer Intentions to Buy or Renovate a Home survey represents an average of 8 per cent of households in Halifax, Montreal, Toronto, Calgary, and Vancouver. While 8 per cent declared that they have a high chance of buying a home and could be considered as 'ready to buy' within the next 12 months, 5 per cent indicated that they have a 50-50 chance of buying. The survey is conducted using a sample of about 4,000 households in each centre surveyed. 'Intentions to buy are up from 2005 when 5 per cent of households were ready to buy a home. This year, strong intentions to buy are consistent with continued high levels of housing starts and sales of existing homes. Favourable economic conditions, such as lo...