CANADA MORTGAGE AND HOUSING CORPORATION is increasing its homeowner mortgage loan insurance premiums effective March 17, 2017. For the average insured homebuyer, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment.
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”
Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI's new capital requirements that came into effect on January 1st of this year that require mortgage insurers to hold additional capital. Capital holdings create a buffer against potential losses, helping to ensure the long term stability of the financial system.
Down payment between 5% and 9.99%
Increase to Monthly Mortgage Payment
Based on a 5 year term @ 2.94% and a 25 year amortization
CANADA MORTGAGE AND HOUSING CORPORATION regularly reviews its premiums and sets them at a level to cover related claims and expenses while also reflecting the regulatory capital requirements.
As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need and offers objective housing research and information to Canadian governments, consumers and the housing industry.
First-time home buyers are now eligible to get $4,000 off the Canadian dream and we need your help to help spread the word.
New Ontario LTT Rebate
Effective January 1st, 2017, Ontario has doubled the land transfer tax rebate for first-time home buyers from $2,000 to $4,000. That means that a first-time home buyer will pay noprovincial tax on homes sold for $368,000 or less.
Ontario REALTORS® lobbied hard for the improved rebate and we're very proud to promote it to first-time buyers.
To help promote this new rebate we've created a website www.FirstHomeRebate.ca with an informative video and calculator that can help you figure out how much tax relief they can claim on their first home.
We’ve also equipped the site with tools and information you can share with prospective buyers to encourage them to get into the market.
REALTORS® and the Canadian Dream
As REALTORS®, we know home ownership is part of the Canadian Dream. It's a source of financial security, drives economic activity and binds communities together. The benefits of home ownership are why OREA fights so hard to protect it and make it more affordable for young families.
So take a minute and visit www.FirstHomeRebate.ca, share it with your friends and be proud that Ontario REALTORS® are fighting to make home ownership more affordable.
It's one of the most exciting experiences of your life...buying your first home, condo or even a loft. You have spent all this time saving for this moment but it turns into a disaster, an agent that does not teach you the process, endless views of homes, the excitement of the 1st place you love, then the disappointment of it ending up out of your price range.
How do we make this adventure a pleasant, in fact, a positive and enjoyable voyage?
The Toronto real estate market has made it a challenge for the 1st time buyer to find their perfect dream home. Managing expectations is important as we have seen the average price of a home rise to about $600,000. You do not want to put yourself into a stressful situation by buying more than you can truly afford.
So what are the steps involved in being prepared to start looking for a house or condo:
1. You need to understand what you can afford, what mortgage suits you best, and feel comfortable with the lending agency you are going to work with, as this is a very long term relationship.
2. Interview real estate agents. Find a good fit, someone who is patient with first time buyers, one who will take the time to teach you each step and one that will not force you into situations that could hurt you in the end. Make sure you are prepared with questions when you begin the process. AND make sure you are working with a fulltime agent that will meet every need.
3. Talk about where you want to live. What neighbourhood fits best with your needs and lifestyle and of course can I afford it. Sometimes its not worth the price to be in the perfect neighbourhood.
4. What type of house or condo is best for you. There is a real difference in costs with each of these decisions.
5. Learn about other costs like lawyers, house inspectors, renovations if needed.
Over the next month I will put together these 5 articles in assisting 1st time buyers have an enjoyable and successful house hunting adventure in Toronto.
My first question when looking at purchasing my 1st home is “What Agent do I go with?”
This is a very tough decision as you will have everyone you know to go with an agent that they had worked with. The first inclination is to go with a family member of friend. The question that you must ask yourself is how would they be with a 1sttime buyer? Just because your parents were successful selling their million dollar home with an agent does not mean you will have the same experience with this agent when you are looking for your first home.
The first question you have to ask is the agent strong with 1st time buyers. Especially in the Toronto market you need a very patient and well versed agent that will take the time to explain every step in buying a home, possible government grants, type of properties and neighbourhood options. The agent should be explaining the different types of mortgage companies you can use and what all the extra costs will be through the process.
I find with my 1st time buyers the most common theme is that they had a fun experience throughout the whole process. This really is a very personal process and it is vital that the end result is you have chosen an agent that you feel comfortable working with.
You have to make sure that you are number 1 in the eyes of your agent and will take the time to send you listings daily and talk to you about the positives and negatives of each property. If you are looking at condos the agent must explain the differences between pre construction and older buildings and the maintenance fees for each building. You want an agent that will have no surprises at the end of your buying process.
Make sure as you interview your agents you are prepared with questions, that there is a pleasant feeling (yes warm and fuzzy) and you truly believe they are not just out to earn a commission but truly want to work with you.
Your agent is critical towards the success of buying your first home make sure you do the research to make the best experience possible.
How Do I pick the Right Mortgage as a 1st Time Buyer?
Buying a home is an exciting and important life event. Being a first time home buyer means that you will have many decisions to make - and just as many questions that need answering. To help simplify this process, I have compiled a wealth of information just for you, the first time home buyer. No matter what stage in the home buying process you're at, we have all the information you'll need along the way.
The hardest part of your first mortgage to decide is who do I talk to? Don’t limit yourself to one person. Do your research of who you can get a mortgage with. There are many options such as financial institutions, a mortgage broker or agency.
The next question is to figure out your finances, what am I approved for and discuss the best type of mortgage. Most first times buyers tend not to know about the different types of mortgages they can work with such as Fixed, open, closed, variable we are even seeing blended mortgages out there. In the past we have seen a lot of open mortgages but lately we have been seeing more closed due to how low the mortgage rates are and where they may be a few years from now.
So now we understand how much and the type of loan, we now must look at do I need mortgage insurance? This is not for everyone though I find most 1st time buyers go for it based on how long their mortgage is. Next, what term is best for me. There are many terms right up to 30 years again this is based on your personal situation.
Most agents work with mortgage brokers and can at least point you in the proper direction and assist you with what questions to ask when you get there.
Make sure you are in control of your mortgage situation don’t just do what all tell you. Do some research to know all scenarios when in the initial meeting with a mortgage broker?
Condos and Housing types
What are the pros and cons of condos?
A condo is a lifestyle. It is a carefree way of ownership. You do not have to be bothered with maintenance, and daily upkeep. You can go away to work or a cottage or holiday and not have to worry about cutting grass, shoving snow, cleaning windows or even picking up newspapers or flyers left at your door. Everything is done by the condo corporation. In fact, besides paying your mortgage and taxes, your maintenance may be the only other thing that you have to pay. Your maintenance can cover everything including heat, hydro, water, repairs and cable TV. The con is that you do not own your own land and you live very close to your neighbours. You do not make up your own rules; you live by the condo corporation’s rules. Also the amount you have to pay in maintenance fee could allow you to increase your mortgage.
Buying a townhouse, semi or detached?
Once you are purchasing a townhouse, there are two differences. You can purchase a freehold townhouse which is very similar to a house except you share walls. The advantage to this is that your heating is usually cheaper than for a detached house because it is not escaping to the outdoors. It is being shared. These homes are usually smaller and cheaper to purchase than detached homes. The con is that you share walls and roofs with your neighbours so it is good if you get alone, not so good if you don’t. You are responsible for maintaining your own townhouse’s upkeep and maintenance.
With a condo townhouse you are also responsible for paying a maintenance fee (which varies from townhouse to townhouse). Some include exterior maintenance and upkeep, water, insurance etc. This gives you the freedom of not have to do for yourself, but also someone else is in control of these things. The con is that the maintenance cost could also increase the amount you are paying towards your mortgage (however, not always).
A semi-detached home or detachedhome are very similar except for the fact that a semi-detached home could share a wall, which could make it a little less expensive. They are also usually smaller in size. You usually do not find large luxury homes semi-detached. Again the con for a semi is that the walls and roof can be shared. This is a problem when you need to do repair and your attached neighbour doesn’t want to. If you want to go away for a period of time, you may need to get someone to watch your property. However it is wonderful to own your own home and have the freedom to do what you want to with it.
Where should I buy?
When you are ready to purchase your first home after so many years of saving, where should you buy? Is Toronto the place for you, perhaps elsewhere in Vaughan, Thornhill, Richmond Hill or Durham? Is a condo the right fit? Should I purchase a townhouse, semi-detached or detached house? Should I buy a newer home, an older home or a fixer up? There are so many questions, where do I get the answers?
I am going to try to answer some of these questions by giving you the pros and cons of each type of property. Remember the final answer to these questions has to come from you and your specific needs. As everyone’s needs differ, remember to choose an agent that you feel very comfortable with because they are going to be you partner in this chapter of your life. Choose an agent that will listen to you and help you answer all of your questions.
Area or as known in real estate-location! Location! Location! I cannot stress enough how important location is in real estate. It is the determining factor to pricing. The rule of thumb is usually the closer to the core of the city, the closer to the subway lines and the larger the home and the lot size, the more you are expected to pay. With this in mind, you have to consider your own personal needs and how much space you need, where you work and what area of the city you spend most of your time. The next thing and most important factor to deciding where you purchase a home is what can you afford and what are you willing to compromise? Most people and especially first time buyer usually have to make compromises. If you can be realistic of the above, the process will be much simpler.
A new home vs. an older home
The main advantage to buying a newer home is that usually you will not have to do repairs for a while. A newer home can usually go five to ten years or longer without needing repairs or updating. If you are buying from a builder or building yourself you can usually choose your own finishes to your own taste. Usually once a newer area gets grass especially in a subdivision the value goes up and usually by more than in an older area.
An older home will usually need repairs or updating. If the updating is done it may not be to your taste and if it is not done you may have to go through the pain of living through a renovation. However, if you are handy you may be able to find a property that needs work (a fixer up) at a great price and make the changes you want to your own taste. Also older areas are more established. They may have better or known schools and they have streets and parks with shade trees.
In its September issue, Vogue magazine listed Toronto's Queen Street West as the second most hip district in the world. From Mexico City to Tokyo. Vogue's Nick Remson wrote that Queen Street West is a "veritable artery of indie pattisseries, homegrown labels and hidden from view galleries - Hallmarks of hipness, if they ever existed."
Vogue also mentions that the Museum of Contemporary Canadian Art, The Drake Hotel, The Gladstone Hotel and other hip spots are located in this neighbourhood.
The magazine also applauds Graffiti Alley where street art " is both legal and lauded." Also mentioned is that Toronto is now revelling in their recent rise in global popularity with the "globe-trotting tastemakers."
Tokyo's Shimokitazan placed number one on the spot. Other districts included on the list were Soderman in Stockholm, Tiong Bahru in Singapore, Centro in St. Paulo, Canal Saint-Marin in Paris, Bushwick in New York and Hackney in London.
What are the two most important things to consider when investing in condominiums?
“Don’t invest more than you can afford, and sell at the right time” according to Hunter Milborne of Milborne Real Estate Inc., who has been selling and marketing condominiums in downtown Toronto for more than 30 years.
Real estate is an excellent investment. Investing in downtown Toronto condos can be very rewarding for those who stick to investing fundamentals, do their research, and have an exit strategy. Consider these tips if you’re thinking of investing downtown Toronto condos:
Plan ahead. Are looking to flip your condo quickly? If so, consider investing in pre-construction condos. You can often get discounts if you buy pre-construction which will increase your chance of making a profit when you decide to sell it. If you’re looking for long-term rental property, you have more options. As long as you put down a reasonable down payment (more than the minimum required amount), your renters will be able to pay down your mortgage.
Pick a good location. Take a careful look at various neighbourhoods before choosing to invest in a particular condo. It is best to invest in a neighbourhood where growth and development are taking place. As the neighbourhood grows, the value of your condo could increase.
Condos are a hands-free investment. Because you pay maintenance fees and there is minimal upkeep involved condos can be particularly suited to first-time investors. Maintenance takes care of the amenities and the building so there is very little for you to worry about.
Do your research. Each condo is owned by a condominium corporation and you want to make sure you’re investing into a company that is well managed. Request a status certificate and look at the condos reserve fund. This fund will cover repairs, maintenance, planned, unplanned work and give a good indication of a condo corporation’s health.
In most cases the decision to sell a home has to do with a life event and sometimes, especially in a market down turn, your home may not have enough equity to allow you to sell.
It might make sense to wait for the market to recover, but in some cases waiting may compound the problem.
Till about 2006 it may have made sense to wait, but from then on it didn't because of how much the market dropped. Nobody could predict what direction prices would go, but waiting may not always be a good idea.
In 2010/2011 after the homebuyer tax credit expired it may not have been a good idea to wait either.
I think what we can conclude here is if prices are rising waiting might be ok, but there's no telling what the market will bring next your unless you're monitoring market trends closing.
Market Trends to Watch
If you are trying to decide if waiting to sell makes sense then I would watch these three trends very closing.
Housing Inventory - Are inventory levels increasing, decreasing, leveling off? What direction does it look like they're going?
Home Prices - Are home prices still trending up, leveling off or heading down?
Months of Inventory - This indicator tells us if the market favors sellers, buyers or is in balance.
What Else Can You Do
Aside from having a home evaluation completed on your home you should also consider having a Seller's Net Sheet Completed so you can see what your proceeds will be when you sell your home.
Once that's established making the decision to sell now versus later will be that much easier.
Canada Revenue Agency - Pre- Construction Assignments
What is an Assignment?
An assignment means that one is purchasing the 'right' to own a condominium not yet in the Land Registry System. Typically the condo has not been built yet or is not ready for you to move in and the building hasn't been registered. In actual fact the 'right ' is just a paper agreement and not the transfer of the property. The Assginment closes before the condo is registered. After purchasing the 'right', the buyer will at some point in time close and register their ownership of the condominium at a later date.
Assignments have increased with heightened condo sales. With increased sales CRA auditors seem to be targeting the Toronto and Vancouver Real Estate markets in search of buyers who purchased condos before they were built, possibly with the intention of flipping the unit for profit when the project is done.
There are some buyers whose circumstances have changed while waiting for the closing of their property. They have had to sell their new condo and are now suffering with huge tax bills that usually apply to Real Estate venturers.
One Toronto tax lawyer, William House, cautions realtors in a two page bulletin that has been passed on to brokerages, that they too could get caught up in this CRA ploy. He advises agents to be careful on the advice they offer to clients. If you have told a client to sell their condo or new home too quickly after completion of construction, even if it is to use the gains to buy up, clients could come back and sue for advice that is in dispute with the CRA. The Toronto Real Estate Board refused to discuss the matter stating only that the rules are "generally clear on the amount of time one has to occupy a unit ( as a principal residence ) to benefit from a capital gains exemption."
In actual fact, there is not a certain time frame specified by the law. The CRA seems to primarily focus on those who sell their new home or condo less than a year of taking possession. Some tax lawyers are advising their clients that they could be subject to a tax bill of at least 50% of any gains made if they sell before living in their residence for less than 2 months to two years.
Mortgage rules tightened to temper hot housing markets in Ontario Real Estate Market
The required down payment on homes worth at least $500,000 will rise to 10 per cent from 5 per cent starting in February 2016.
Canada is raising minimum down payments on some on government-insured mortgages, a move aimed at curbing the risk of a housing crash in Toronto and Vancouver where high prices are leaving some families at risk from heavy debt loads.
Finance Minister Bill Morneau announced the plans on Friday morning in Ottawa. The required down payment on homes worth at least $500,000 will rise to 10 per cent from 5 per cent starting Feb. 15, 2016 — however the higher threshold will only apply to the portion in excess of that mark. That means the minimum downpayment for a home worth up to $1 million would be 7.5 per cent.
“The government’s role in housing is to set and maintain a framework that is equitable, stable and sustainable,” Morneau said in a statement. “The actions taken today prudently address emerging vulnerabilities in certain housing markets while not overburdening other regions.”
Years of surging prices, a condo construction boom and low borrowing costs have drawn warnings from the International Monetary Fund and Canada’s own housing agency. About 11 per cent of households have mortgage debt of at least 500 per cent of disposable income, according to the C.D. Howe research group.
Morneau has said housing was one of the first briefings he sought after his Liberal Party won an Oct. 19 election, and people familiar with the discussions said the department had pushed for higher down payments on more expensive homes under the previous government.
Setting down payment rules by a home’s price allows the government to target the hottest areas without damaging slower markets, such as Calgary where consumers are struggling as energy companies cancel projects and fire workers.
The risk of overheating is greater in Vancouver where the average price for a detached home has jumped to almost $1.6 million, and in Toronto where a detached home in Toronto averages more than $1 million.
Canada’s central bank considers imbalances in consumer finances one of the biggest risks to financial stability, and Governor Stephen Poloz has said other policy makers must take the lead in constraining the risks. Poloz has cut his trend-setting overnight interest rate to 0.5 per cent, saying that stimulus is needed to sustain an economic recovery threatened by a drop in crude oil prices.
Besides people living in the most expensive markets, young families are the most at risk, according to a C.D. Howe report this week. Those borrowers may have never seen an era of rising interest rates, which may be coming now as the U.S. Federal Reserve signals it’s about to tighten, which can have an impact on global borrowing costs.
After weeks of dithering, the Ontario government has ruled against expanding the municipal land transfer tax beyond Toronto’s borders.
Postmedia filesThe provincial Tories lobbied against an expansion of municipal land transfer taxes.
There is already a levy on all home sales collected by the province, and Toronto has a unique power to collect an additional tax. But more than a month after it was revealed Queen’s Park was considering allowing the province’s other 443 municipalities to collect the tax, Municipal Affairs Minister Ted McMeekin announced Tuesday the plan won’t move ahead.
“Other than in Toronto, where the power already exists, our government will not be extending Municipal Land Transfer Tax powers to other Ontario municipalities,” he said.
The provincial land transfer taxes ranges from 0.5 per cent to two per cent, depending on the value of the home. Toronto’s runs a similar scale.
In Toronto, homebuyers pay an average of $12,000 in provincial and municipal land transfer taxes, according to the Ontario Real Estate Association, which lobbied hard against the change. On a $1 million home in Toronto, that bill rises to $32,200. In a red-hot housing market, that might not seem like a threat to realtors’ business, but they cautioned against allowing the tax to spread to spread to other cities.
First-time home buys get a rebate of up to $2,000 for the provincial tax and nearly double that in Toronto.
The Progressive Conservatives at Queen’s Park were equally critical, with deputy leader Steve Clark leading the charge against the municipal land transfer tax. He warned that expanding the tax would cost Ontarians upwards of $10,000 per home sale.
That news came out of discussions the province was having with cities about how to increase their revenues and help them handle the costs of social services. In late October, it was revealed that land-transfer taxes were part of those talks.
“Looking at the consultation we did, no one was asking for a land transfer tax and there was a campaign of misinformation in the house there, and it just made sense to me and to my caucus” to announce that change, McMeekin said Tuesday after question period, where he announced the sudden about-face.
PC leader Patrick Brown lauded Clark’s work and the OREA for spreading the word and said he’s glad the Liberals changed course.
I don’t know why the minister decided to get up in the middle of question period… to kind of pull something out of thin air and throw it on the table
“I’ve said I’ll criticize the government when they make a bad decision; I will applaud them if they make a good decision. It is a good decision to back away from this,” Brown said.
NDP leader Andrea Horwath said it’s curious the minister announced the change with consultations ongoing. She said many cities are still struggling to balance their books after years of service downloads and she wonders what the government will do now to help replace that possible revenue.
“Municipalities are still in very bad shape,” Horwath said. “The topic had been discussed at a number of places (including) the Association of Municipalities of Ontario. I don’t know why the minister decided to get up in the middle of question period… to kind of pull something out of thin air and throw it on the table.”
Downsizing to a smaller home, or selling the family home, can be an emotional experience, especially if you’ve been out of the real estate market for a long time. And much has changed in the real estate world in recent years. There’s no shortage of information on the Internet, but much of it focuses on market trends and how to get the best price. You also need information about your rights and responsibilities as a buyer or seller. How do you ensure you are protected?
Fortunately, the Real Estate Council of Ontario (RECO) is here to help. We work to protect people just like you and enforce the rules that real estate professionals in Ontario must follow. That means we can offer buyers and sellers impartial advice on how to protect themselves and ask the right questions before making one of the most important financial commitments of your life.
All brokers and salespersons in Ontario are registered with, and regulated by, RECO. That’s why working with a real estate professional provides buyers and sellers with three pillars of protection: Knowledge, Professional Standards and Insurance.
If you’ve owned your current home for many years, you may find that a lot has changed in the real estate world. Understanding what has changed can come in handy when you’re entering the market for the first time in a while. Here are a few of the key ways the real estate marketplace has changed, and how these changes may impact you as you buy or sell a home.
Real estate professionals are more accessible. Cell phones and mobile technologies have made brokers and salespersons easier to reach, so when you need guidance or advice, you’re more likely to get a quick response.
Commerce is conducted electronically. Transactions often take place electronically as well. Contracts can be signed with electronic signatures, offers can be submitted via email, and money can be transferred electronically too. This can make the buying and selling process more efficient, if you choose to take this approach.
Real estate professionals can offer specialized service. Different age groups may look at real estate differently and have unique needs when it comes to buying or selling. The real estate profession has responded to this reality, and there are now brokers and salespersons who specialize in serving the boomer market.
One thing hasn’t changed: the knowledge and experience of a real estate professional can be very valuable when you’re buying or selling your home.
A broker or salesperson can help you navigate the process and provide key advice. Before you choose a representative, ask friends or family if they’ve worked with anyone they would recommend.
Be sure to interview a few candidates to ask them about their approach to the buying and selling process, their experience, the services they will offer, and the fees and commission they will charge. It’s also a good idea to ask for references and actually contact them.
A lot has changed in the real estate world, but the changes have provided a lot of benefits for home buyers and sellers. As always, taking the time to make an informed decision will go a long way in having a positive downsizing experience