The Federal Government has announced four new clamp downs on mortgage financing effective Monday, July 9th, 2012.
These changes include:
- Reducing the maximum amortization period to 25 years from 30 years
- Reducing the maximum amount of equity homeowners can take out of their homes when refinancing to 80% from the current 85%
- Limiting the availability of government-backed mortgages to homes with a purchase price of less than $1 million
- Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%
Where we are coming from: In 2008 the Government allowed up to 100% financing at 40 year amortizations. If we compare a $300,000 mortgage at 5.79% for 40 years in 2008, the minimum monthly payment required was $1,592.72.
Under the new rules announced today, a $300,000 mortgage for 25 years at a 3.09% five-year fixed rate, the minimum monthly payment required will be $1,433.63.
The difference comparing where we came from to where we will stand after the new rules? Your monthly payment is reduced by $159.09 and you’re mortgage-free 15 years sooner!
Is there a big difference between the 30-year vs 25? No, the difference is only $52.48 per $100,000 in mortgage debt. As seen in the above example, it actually places Canadians in a better financial position.
These changes will only affect insured mortgages. So if you have greater than a 20% down payment or equity built up in your home, we may see these options around a bit longer. But, until July 9th, you can still get a 30-year mortgage even if you have an insured mortgage.
As for the refinance limit, this shows us the federal Government wants to ensure prudence to reduce spending and be certain people are not refinancing all the equity out of their homes.
Subject to approval by the legislature, the B.C. government intends to implement a temporary BC First-Time New Home Buyers’ Bonus. Effective February 21, 2012, to March 31, 2013, the bonus is a one-time refundable personal income tax credit worth up to $10,000.
Requirements to Qualify for the Bonus
E L I G I B L E F I R S T - T I M E N E W H O M E B U Y E R
You will qualify as a first-time new home buyer if:
* You purchase or build an eligible new home located in B.C.;
* You, or for couples, you and your spouse or common law partner, have never previously owned a primary residence;
* You file a 2011 B.C. resident personal income tax return, or if you move to B.C. after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
* You are eligible for the B.C. HST New Housing Rebate; and
* You intend to live in the home as your primary residence.
E L I G I B L E N E W H O M E
An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:
* A written agreement of purchase and sale is entered into on or after February 21, 2012;
* HST is payable on the home (e.g., HST will generally be payable if ownership or possession of the home transfers before April 1, 2013 – see further details below); and
* No one else has claimed a bonus in respect of the home.
The bonus will be available in respect of owner-built homes where:
* A written agreement of purchase and sale in respect of the land and building is entered into on or after
February 21, 2012;
* Construction of the home is complete, or the home is occupied, before April 1, 2013; and
* No one else has claimed a bonus in respect of the home. A substantially renovated home is one where all or substantially all of the interior of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test). Amount of the Bonus
M A X I M U M A M O U N T
The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to HST) to a maximum of $10,000.
P H A S E - O U T F O R H I G H E R
I N C O M E E A R N E R S
The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:
* For single individuals, the bonus is reduced by 20 cents for every dollar in net income over $150,000 (bonus is
reduced to zero at $200,000 net income).
* For couples, the bonus is reduced by 10 cents for every dollar in family net income over $150,000 (bonus is reduced to zero at $250,000 family net income).
A P P L I C A T I O N P R O C E S S
Individuals must apply for the bonus through the B.C. government. Individuals can apply once application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.
E L I G I B L E N E W H O M E
The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated
homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013.Potential buyers should consult with the builder to
determine if the home will be subject to the HST.
For owner-built homes, the bonus will be based on land and construction costs subject to the HST.
Eligible new homes will include:
* Detached Houses, semi-detached houses, duplexes and townhouses,
* Residential condominium units,
* Mobile homes and floating homes, and
* Residential units in a cooperative housing corporation.
For More Information
I N C O M E T A X A T I O N B R A N C H
Ministry of Finance
Province of British Columbia
Telephone: (250) 387-3332 or 1 (877) 387-3332
Strata Fee which is also known as monthly fee is a monthly maintenance fee an owner pays that is used by the strata corporation to pay the expenses of the building or buildings in the development.
The strata corporation is responsible for the common expenses of the strata corporation.
Also the strata corporation is responsible for the operating fund and contingency reserve fund. To meet its expenses the strata corporation must establish, and the owners must contribute, by means of strata fees, to
(a) an operating fund for common expenses that usually occur either once a year or more often than once a year, and
(b) a contingency reserve fund for common expenses that usually occur less often than once a year or that do not usually occur.
How are strata fees calculated?
The individual strata maintenance fee is assessed by taking the total cost of the strata’s expenses and divided that by the unit entitlement of the strata lot. The unit entitlement is related to the square footage of the strata lot.
What does the strata fees cover?
The strata fee (monthly fee) can include: insurance for common areas, landscaping of the grounds, garbage pick up, snow removal, as well as facilities such as exercise, club house, rec centre, etc. Be sure to check if the strata fees include water, gas, electricity and be aware of what utility bills you need to set up and pay separately.
Please see the Strata Property Act for more information at www.bclaws.ca
Courtesy of Greater Vancouver Real Estate Board
Buying a home is one of the most important decisions you’ll ever make. So it’s always best to get all the help you can. Here are some steps to consider.
- Are you ready to buy?
You should already have saved some of your down payment and you should be good at managing debt like credit cards or student loans. A mortgage is a financial responsibility that also requires constant upkeep.
- Decide how much you can afford
Use this simple equation to consider what you can expect after you’ve saved for your down payment. The cost of buying a home = one time costs (down payment, legal fees, inspection fees and taxes) + monthly costs (mortgage, utilities, maintenance, insurance and property taxes).
- Decide what you want to buy
First, decide where you want to live (urban, suburban, rural) and then decide which neighbourhood suits you best and what type of home (detached, attached or apartment) you want. Whether or not the property is new or resale may also affect your costs. See the Dream Home Checklist for more information.
- Find the right REALTOR®
There are many ways to find a REALTOR®: drive through neighbourhoods that interest you and jot down names, go to open houses, look at advertising, ask friends and family if they have worked with a REALTOR® they like. Interview two or three and pick the one you like best. Find a REALTOR®.
- See what’s out there
REALTORS® run an incredible search tool called the Multiple Listings Service® (MLS® for short) which contains information on property listings. Your REALTOR® can send you listings that fit your criteria and together, you can draw up a short list and visit a handful of homes to make an informed and wise decision. You can also view listings here.
- Sell your current home
It’s the age-old question, do I sell my home before I buy, or do I buy my new home before I sell? It’s natural to want to buy your new home first so you have the security of knowing where you’ll be living. But there are advantages to selling first, buying later:
Look at the section 10 steps to selling your home for useful tips.
- You’ll know how much your house is worth, so you can be surer of how much you can spend
- There’s a chance you won’t have to make your offer subject to financing
- You might be able to arrange a long closing to give you time to look
- It could be a stressful situation, but it’s also stressful to own two homes!
- Add some specialists to your team
A mortgage broker may be able to get you the best possible rates. A notary public or a lawyer will help you understand the many legal documents that come with buying your home. A home inspector can save you from unpleasant surprises when you move in.
- Make an offer
REALTORS® are expertly trained and will prepare your offer for you. For some of the terms you’ll find in the documents, visit our Words You Need to Know: Real Estate Terms section for help. If you have any concerns or hesitations, ask your REALTOR® to explain.
- Arrange a mortgage
There are hundreds of banks, credit unions and other lenders. How do you select which one is best for you? Now is not the time to be money-shy! Talk to your financial institution and call around to others. Ask friends, family and colleagues. REALTORS® are very knowledgeable about mortgages and have lots of good advice and they may be able to refer you to a mortgage broker. Financing your home.
- Close the deal and move in
You offer has been accepted! Great news! Your REALTOR® and notary public or lawyer will do most of the closing work. But make sure to ask about any conditions of the agreement that require immediate action on your part. Before you know it, you’ll be handed the keys to your new home.
By: CTVNews.ca Staff
Date: Monday Apr. 16, 2012 7:13 AM PT
Average housing prices in Canada edged down slightly last month but sales rose to the highest monthly level in close to two years. The latest nation-wide housing numbers were released by the Canadian Real Estate Agency on Monday. According to the statement, the national average for home prices was down 0.5 per cent in March, compared to one year earlier.
That meant the national average price for a home sold in March 2012 was $369,677, but individual markets varied widely, said Gregory Klump, CREA's chief economist.
"Average prices are up from year-ago levels in most large urban centres," Klump said in a release. "The slight decline in the national average price points to a tug of war between Toronto and Vancouver from the standpoint of their sales mix compared to last year."
He added that the national average home price last spring was "skewed higher" by record high-end home sales in Vancouver. The latest figures confirmed the expectation that the phenomenon would not recur this year. "The decline in average price reflects the change in Vancouver's sales mix, not housing price deflation," Klump said. The March average of $369,677 was down from just under $373,000 in February and down from $371,591 in March 2011.
Meanwhile, home sales rose 2.5 per cent from February to March on average across Canada, with two-thirds of all local markets showing increases in sales, with Toronto, Calgary and Edmonton leading the pack. In total 108,373 homes traded hands through the industry's MLS system in the first three months of the year. According to the CREA, that marked a 5 per cent increase over the five-year average for first quarter sales. It was 3.8 per cent above the 10-year average, and 4.4 per cent above activity in the first quarter of 2011.
All information is taken from the Residential Tenancy Branch.
Every tenancy agreement MUST be in writing. The document MUST include legal names of landlord and tenant, address of rental unit, date tenancy agreement is entered into, agreed terms: start date of tenancy, amount of rent, date rent is due, and services included in the rent.
Before listing the property the landlord must have an agreement with the tenant or give the tenants proper written notice that states the date, time and reason for entry. The tenant must receive the notice at least 24 hours, and not more than 30 days, before the time of entry.
Generally, a landlord, or a landlord's agent, must give written notice at least 24 hours and not more than 30 days in advance. The notice must give the reasons for entering and the time that the landlord will enter the rental unit, which must be between 8 a.m. and 9 p.m., unless the tenant agrees to another time.
Showing a unit to prospective buyers is a valid reason to enter a rental unit. The key is the time that the notice is received, not when it was sent. The date that a notice is considered received depends on when it was sent:
- Same day, if hand delivered
- Three days later, if faxed, taped to the tenant's door or put in the tenant's mailbox
- Five days later, if sent by regular or registered mail.
Ideally, a tenant and landlord agree on a schedule of viewing times to include in a single notice. Otherwise, the landlord must give the tenant notice each time before showing the rental unit. When notice has been given, the landlord can show the rental unit even if the tenant is not home. A landlord may enter common areas of the property at any time without giving the tenant notice.
The landlord must keep in mind that a tenant is entitled to reasonable privacy and freedom from unreasonable disturbance. A notice indicating showings will take place daily from 9 a.m. to 9 p.m. for a three-week period would be unreasonable. A lockbox cannot be used without the tenant’s permission.
*A landlord should keep a record of all communication between themselves and the tenant incase there is a dispute.
In the Contract of Purchase and Sale the tenancy agreement should be attached as part of the contract. If the tenants are remaining, the deposit from the tenants should be included in the Contract of Purchase and Sale, as well as all terms of the tenancy agreement.
If the tenants are not remaining, they can only be given notice to move out once there is an UNCONDITIONAL offer and it meets the terms of the tenancy agreement.
Giving notice on a periodic tenancy
For a month-to-month tenancy, or a periodic tenancy with a different period, the landlord must give the tenant a Two-Month Notice to End Tenancy. The tenant is also entitled to financial compensation equal to one-month’s rent. A tenant can end the tenancy earlier by giving the landlord at least 10-days written notice and paying the rent up to, and including, the planned move-out date.
If the tenant has already paid a full month’s rent, the landlord must rebate a pro-rated portion of the rent. The tenant is also still entitled to the full compensation. The property seller (or landlord) must pay the tenant compensation equal to one month’s rent on or before the last day of the tenancy. This requirement applies whether the tenant vacates before or after transfer of the property title. RTA s. 51 gives the tenant the option to withhold the last month’s rent. If the tenant has already paid the last month’s rent and chooses to give 10-days written notice and vacate the premises early, the landlord must pay the tenant a pro-rated amount and ensure the tenant receives compensation equal to one-month’s rent.
If the tenants are not remaining, they can only be given notice to move out once there is an UNCONDITIONAL offer and it meets the terms of the tenancy agreement.
Purchaser wants to use the rental unit for another purpose
The tenant can be served a 2-Month Notice to End Tenancy after the title of the property has been transferred and all required government permits and approvals are in place when the purchaser intends to:
- Demolish the rental unit or do major repairs or renovations that require the building or rental unit be empty.
- Convert the rental unit to a strata property unit, a non-profit co-operative or society, or a not-for-profit housing co-operative under the Cooperative Association Act.
- Convert the rental unit to non-residential use, such as a shop.
- Convert the rental unit into a caretaker’s premises.
For more information visit: http://www.rto.gov.bc.ca/
A great article from the Great Vancouver Real Estate Board:
Assessment notices - a wake-up call for property owners
Property owners throughout BC received their 2012 assessment notice the first week of January from BC Assessment (BCA).
This notice is BC Assessment estimate of a property's value as of July 1, 2011, and for new construction or substantially renovated homes, the physical condition as of October 31, 2011.
BCA is the government agency responsible for determining and reporting property value estimates for the 1,917,394 properties in its database, a 0.75% increase in the number of properties since 2011.
BC ASSESSMENT AND A REALTOR ASSESSMENT.
WHY THE DIFFERENCE?
BC ASSESSMENT AND THE MARKET VALUE DETERMINED BY A REALTOR MAY BE DIFFERENT. WHY?
Both BCA assessors and REALTORS calculate market value by analyzing sales of comparable homes within a local market, and look at factors that affect the value such as size of home, view, location - on a busy or quiet street, number of bedrooms, construction quality, floor level, and garage or praking stalls.
Where every lot and every home on a street are typically the same, both BCA's value and a REALTOR's value will be similar during stable market conditions.
Differences occur in neighbourhoods where lots have been rezoned or are different shapes and sizes, where architecture and views are unique, and where owners have made changes that BCA hasn't yet taken into account.
Differences also occur during market instability when prices rise and fall during the six-month period between July 1 the following year.
For more information visit www.rebgv.org/property-assessment-notice
WANT TO KNOW HOW MUCH YOUR PROPERTY IS WORTH I N TODAY'S MARKET? Call for a FREE property evaluation!
Keller Williams Elite Realty
Canadian’s Have Limited Time to Take Advantage of the 35 Year Mortgage
and Lower Monthly Mortgage Payments
With the rising cost of homes, especially in the Lower Mainland, many homebuyers have chosen a longer amortization period (the number of years it will take you to become mortgage free) in order to keep monthly mortgage payments lower. While this also means they pay more interest over the life of their mortgage and are slower to build equity in their home, longer amortization periods allows home buyers to qualify for higher mortgages and thus get into their dream home sooner. This is particularly helpful in high-cost housing markets such as Greater Vancouver’s. And even with a longer amortization period, home buyers can always choose to shorten their amortization and save on interest costs by making extra payments or an annual lump-sum principal pre-payment, depending on the terms of their mortgage.
While currently the Canadian industry’s benchmark amortization period is 25 years, the maximum amortization period allowed in Canada is 35 years. That is about to change however. This morning, Canada’s Finance Minister Jim Flaherty, made an announcement of upcoming changes to Canadian mortgages rules, which include a lower maximum amortization period. The three main changes are such:
1) Mortgage amortization periods reduced from 35 years to 30 years.
2) The maximum Canadians can borrow to refinance their mortgage will be 85% of their home value, down from the current maximum of 90%.
3) The government will be withdrawing insurance backings on lines of credit secured by homes.
These changes are Ottawa’s attempt at targeting rising household debt. Mr. Flaherty has stated he is not concerned about Canadian’s mortgage default rate, which stands at less than 1%. Rather his concern is with those who are borrowing as much as possible and will not be able to pay down their mortgages if borrowing rates rise.
CIBC chief economist Avery Shenfeld has referred to the mortgage changes as part of a larger move by the government to “force Canadians on a debt diet” as household debt levels sit at record levels. However, he also reassures us that “Canadians aren't on the verge of a U.S.-style default crisis – not at these interest rates, and not with debt having been granted to stronger hands than was the case before America's crisis, when subprime mortgages and credit cards were given out like candy.”
When will these changes take place? These changes will not happen immediately because of a requirement to give the industry 60 days notice before making policy changes of this nature. This means we will likely see a surge in home buying over the next couple months, as many Canadians rush to take advantage of the 35 year amortization period.
If you are interested in taking advantage of the current amortization period before these changes take effect, give me a call!!
Keller Williams Elite Realty
778 866 7478