There is a better way. At 1.85%, a variable-rate product today may look as attractive as ever, but the five-year fixed-rate closed mortgage is falling fast. Brad Vokins, Mobile Mortgage Specialist with RBC Royal Bank is quoting a five-year-fixed-rate at 3.64%. What if the banks reduce the long-term rates even more!

In the past variable rate mortgages have benefited the consumer far better than fixed-rate mortgages, but the time may be turning. the central bank has raised rates a couple of times now and will likely continue to raise rates. No one expects that the next five years will follow the past five years, so you may be able to argue that it is a good idea to lock in now.

Bank of Montreal is forecasting another 25 basis point move in September and says rates will climb another 1.5 percentage points by the end of 2011. If this is correct, by 2012, the variable-rate products out today would come in at just above 3.75%, if the discounting remains the same. And some banks are forcasting that the variable-rate product you can get today will end up at 6% by 2015. Fears of such a scenario are driving people into fixed-rate products again. That, plus new mortgage rules that make it easier to qualify for a mortgage if you go for a fixed-rate product with a term of five years or longer.

The Bank of Canada is doing what it said and increasing rates. The prediction is that the increases will continue, so now is a good time to consider locking in for a term. It makes sense, but with variable rate still under 2%, it’s easy to see why people wouldn’t want to lock in. If you are secure in your financial situation, you might just want to keep riding the variable wave.

There just never seems to be a clear answer on whether to lock in or stay variable, but this much is clear. Mortgage rates are low. Really low. And with them so low, it’s a great way for you to increase your piece of the pie. Take advantage, negotiate the lowest rate possible, then keep your payments a little higher and watch the principal amount of your mortgage decrease every month. You’ll be mortgage free in no time!  Then throw a big party and eat your own pie!

It’s all over the papers that the market is cooling (and it is, but the sky is not falling….but that’s another blog!) and with a cooling  market it is that much more important to create a plan before jumping into the market.

Our neighbours to the south have experienced a housing burst but thankfully, we have not. More conservative regulations helped to prevent people from getting in over their heads. Yet another reason to be glad to be a Canadian!

But the market is different now than it was so anyone buying a house needs to be extra careful they have all their ducks in a row. Here are six things to remember to ensure you end up with the house of your dreams.

1. Build your team – You need a knowledgeable real estate agent, lawyer and mortgage broker. (Hopefully this is where you decide to call me! But really, just make sure you choose someone you can trust to help you make the decision that is right for you at this time in your life.)

2. Get a pre-approval – Having a great mortgage broker on your side can give you great peace of mind. They will lock in your mortgage rate for up to 120 days. Keep in mink that pre-approvals are almost always subject to certain conditions that you will need to meet before financing is confirmed. To protect and ensure that you can afford to buy the house of your dreams, it is a good idea to have a condition for financing on any offers to purchase a house.

3. Set a budget and stick to it – It’s hard not to let emotions take over during the home buying process. Your pre-approval amount is what the bank is willing to lend you and may not necessarily be an amount you can comfortably afford to pay, after taking into consideration your lifestyle needs. Do you have an active social life? Do you enjoy eating out? Are you planning on having kids? Are you saving for your RRSPs? When a bank provides an approval, they are based on CMHC guidelines, not the costs associated with your lifestyle.

For example, your financial institution will examine your gross debt servicing. Your monthly housing costs should not exceed 32% of your gross monthly household income. Housing costs include monthly mortgage payments, taxes, heating expenses and half of monthly condominium fees (if you are buying a condo). Your mortgage lender will also examine your total debt servicing ratio. This is your entire monthly debt load and it should not exceed 40% of your gross monthly income. This includes housing costs such as property taxes, heating costs and condo fees and other debts such as car payments, personal loans and credit card payments.

4. Factor in closing costs -  Far too often people are surprised when they get the final statement of adjustments from their lawyers and are left scrambling to come up with thousands of dollars to cover the shortfall. On top of the purchase price, there are also land transfer tax and legal fees. For example you must pay the Provincial Land Transfer Tax (first time buyers are eligible for a rebate), lawyer fees, maybe land taxes and an oil tank fill up. If you are buying in a new development, you may also be responsible for development charges, such as education levies and fees for enrolment in Tarion Warranty Corporation and installation of hydro meters. My advice? When negotiating the purchase of a new home, you should put a cap on all these extra charges. For example, if you capped all your developments charges and levies at $3,000, this is the maximum the builder could charge you at closing time, regardless of what the actual fees should be.

5. Title Insuance – Title insurance and identity theft coverage offer peace o fmind and protection. Although real estate title fraud is far less frequent than other forms of identity theft, it is a violation that can have devastating and long lasting effect on its victims.

And finally, once you are happy and settled in your new home, the journey is not over, it is just beginning. The goal is to pay off your mortgage as soon as comfortably possible. Try this:

6.  Bump up frequency of your payments – To save substantially on your interest costs and pay off your mortgage faster, set your payments to rapid weekly or bi-weekly mortgage payments options instead of monthly. The total outlay is only slightly greater than if you coose to pay monthly, but the impact on the bottom line is amazing. For instance, if you started with a 25 year amortization, by making rapid bi-weekly payments you would pay off your mortgage in 21. 4 years instead of 25. This saves tens of thousands of dollars in interest costs!

Regardless of where we are in the economic cycle or how robust the real estate market is, we all need a home, Finding the right home to suit your budget, your lifestyle and your aspirations is always a challenge. But with the right team, the right tools, a little patience and a little luck, you may be moving into the house of your dreams sooner than you ever imagined!

Provincial Land Transfer Tax is payable anywhere in Ontario, so even if you choose to purchase your home outside the Durham Region, you are still eligible for the rebate. (Though Blair and I hope you choose to live here ….. we need more friends!) The maximum rebate of $2,000 is equivalent to the provincial tax payable on a $227,500 property.

Of course, just like anything else, there are some eligibility requirements. The buyer must be at least 18 years old and occupy the house as his or her principal residence. The buyer cannot have previously owned a home, anywhere in the world, at any time. And finally, if the buyer has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse. There is a chance you can get the rebate if the buyer’s spouse owned an interest in a home before becoming the buyer’s spouse but not while the buyer spouse.

There is more information available by calling the Ontario Ministry of Finance: 1-800-263-7965.

So there you have it. A little tax break for you as a first time home buyer. And maybe the rebate won’t pay for all the tax you put out, but it’s a start. With interest rates still so low, plenty of listings on the market and a little incentive from the tax-man, maybe now is just the right time for you to get into the market and start paying yourself instead of your landlord! As always, feel free to ask questions and post your comments.

Imagine taking a stroll along the waterfront and enjoying the view of all the gorgeous boats sitting in the marina. A lovely little cafe or pub with a welcoming patio for a refreshing beverage. Somewhere quaint to enjoy the fantastic view of the blue water. Now imagine all this happening in Oshawa. Yes, you read correctly, Oshawa! This really is a great city with plenty to offer and it’s about time we spent a little money on the waterfront to bring it back to its former glory.

The federal funding announcement stated a commitment of $19.4 million for environmental clean up, east wharf port consolidation and landscape buffers. Will we get a pretty lake front and more jobs? How will this affect the tax base in Oshawa (hopefully it’ll all be good!)?

So how did this all come about? Go to the Oshawa Habour site for an overview of the recent information meeting to read more of the details I summarize here. Briefly, in 1966 Oshawa gave the land away. Then in 2006 there was a proposal to put a rail spur on part of the land so Oshawa sued to get the land back. Fight, lawsuit, money (yes, your tax dollars) and …. nothing! So in 2009 the Crown tried to negotiate a settlement. Negotiations ensued and in May, 2010 an agreement was reached. Oshawa gets some (not all) land back and a pile of cash as mentioned above. The city does have to spend about $1 million for parkland, but has that money in a reserve fund already, so hopefully we are good to go.

Is the deal perfect? No. But perfection is in the eye of the beholder and there are always two sides to every arguement. We all need a little give and take to reach an agreement (not unlike most real estate deals – but that’s another blog!). So let’s take what we got and run with it! Hopefully you and I will be discussing your new home purchase over a beverage while sitting outside on the deck, overlooking great boats and clear blue water!

Have you heard the news that the provincial government is now planning on stopping the next extension of the 407 at Simcoe Street rather than taking it through to the Highway 35/115? Do the powers that be really think Simcoe Street has  the capacity to handle traffic resulting from a 407 terminus? In 2007 the Prime Minister of Canada and the Premier of Ontario committed to the completion of the 407 East Extension from current terminus at Brock Road in Pickering to Highway 35/115 in Clarington by 2013. This commitment has been reiterated on many occasions by Ministry of Transportation staff and Ministers in your Government.

I’m including a link here to a letter written by Roger Anderson, Regional Chair and CEO, The Regional Municipality of Durham. I encourage you to put his letter into your own words and then forward it on to the following representatives by fax or mail.

Region MPPs:

Christine Elliott, Whitby-Oshawa (905.430.1840)

John O’Toole, Durham (905-697-1506)

Jerry Ouellette, Oshawa (905-723-1054)

Joe Dickson, Ajax-Pickering (905-427-6976)

Wayne Arthurs, Pickering-Scarborough East (905-509-0334)

Also, think about contacting:

Premier Dalton McGuinty                                                   1-416- 325-9895

Minister of Transportation, Kathleen Wynne                       1-416 -327-9188

Minister of Energy & Infrastructure, Brad Duguid                1-416-327-6754

I believe that the 407 extension is needed. They’ve been promising it to us for years and now need to deliver. The last thing we need is to have the 407 end at Simcoe Street – a road that is already substandard. Together, we can make our government accountable to us. We need them to hear that all we want is what has been repeatedly promised to us!

Clean and clear walkways, pretty landscaping and plenty of lighting will all enhance your home’s main feature, a gracious entrance. But here we will focus on the doorway itself.

Have you thought about replacing your front door? If is is poorly hung or has an improper fit, not only will you have a disappointing first impression, it could contribute to energy loss and security risks. In these cases, the door requires replacing. You may wish to consider a complete entry system, instead of just a door exchange. With the system, the door is pre-hung in its frame, with each of its components designed to work reliably together – your best bet when it comes to dependable energy efficiency and overall strength.

Your existing door may be in great shape, so a simple update may be all that is required. Painting will allow you to change the colour in the future, while staining a wood door will lend to a sophisticated, formal entrance.

In choosing a paint colour for the front door, it is important to decide on the overall look and feel you wish to achieve. Do you want to draw attention to the entrance as a bold focal point? Then choose a standout colour that contrasts (but is complimentary) to the exterior of the house.

If you prefer to have a discreet front door, then opt for a more subtle colour. Choose this option if your door is awkwardly placed so as to avoid disturbing the overall balance of your home.

Classic black makes a formal and grand statement. Navy blue and deep green work beautifully with terracotta brick exteriors, while stone or siding in grey looks best with a selection from the red family. Keep in mind that secondary doors and garages should not compete with the front door. For these areas, use an entirely different colour or one that blends closely with the exterior.

And don’t forget the hardware. As your top priority choose security over aesthetics. You want protection for any forced entry attacks. But there are several great options in the market today. Coordinate door knockers, kick-plates, house numbers, mail slots and light fixtures for a harmonious appearance.

An improved appearance pays dividends in enjoyments and will increase the resale value of your home. Buyers will spend some time waiting for their agent to open the lockbox to obtain the key for your home. You want them to be able to see a pretty door, that is well-maintained, giving them a preview of what to expect when they see the inside of your home. So go ahead and splurge a little. You never get a second chance to make a good first impression!

Today the market in the Durham Region is great. News reporters are going to tell you that the market statistics are down and the “bubble” has burst because they sell based on sensationalism. Do they think we can’t remember that they were saying the bubble had burst at the end of 2008? I don’t think there ever was a bubble and most real estate analysts will tell you the same thing. We have had a slow and steady increase in sales and prices within the Durham Region and any dips we saw at the beginning of 2009 have been regained. There are always going to be ups and downs in the market, just as in any business.

So should you buy a house now? Or for that matter, are you thinking “Should I sell my home“? Sure, maybe you will get a little less for your home this month than you would have received last month, but the house you buy is going to be worth less also, so it’ll all work out in the end. And if you are buying now, don’t worry that the house might have been $5,000 less if you waited another 30 days, instead, buy your own home, start paying your own mortgage and building up the equity in your house. In five years, you’ll wonder why you ever hesitated. Mortgage rates are still really low. Go to my website and see a banner/link to Kyle Erickson’s website for amazing mortgage rates. He has lenders that he saves just for my clients and you won’t believe the deal he can get for you!

So call and see what type of mortgage you qualify for, then call me and we’ll go find the home of your dreams!

The government has released general transition rules with regard to the HST and how it will apply to Realtors’® services. It is assumed that the commissions on a sale become due when the property is sold or leased and the portion that is subject to HST is determined to the extent, expressed as a percentage, that the services are performed on or after July 1, 2010. However, if 90% or more of the services are performed before July 1, 2010, the HST will not apply.

For example, a Realtors’® services are performed from June 1, 2010 to July 2, 2010 with the sale of the property closing on July 2, 2010. The Realtors’® commission becomes due at that time of closing. More than 90 per cent of the Realtors’® services were performed before July 1, 2010. In these circumstances, the GST at the rate of five per cent will apply to the REALTORS® services. In another example, a Realtors’® services are performed from May 1, 2010 to July 31, 2010 with the sale of the property closing on July 31, 2010. The Realtors’® commission becomes due at that time. In this case, two thirds of the services were performed from May 1, 2010 to June 30, 2010 and one third of the services were performed from July 1, 2010 to July 31, 2010. The Realtors’® will charge GST on two thirds of the amount charged for the services and HST on the remaining third.

HST highlights
• Starting July 1st, the HST will be in effect in Ontario.
• Purchasers of newly constructed homes for primary residences up to $400,000 would not, on average, be subject to an additional tax burden in view of the new housing rebate up to $24,000.
• There is a new rental housing rebate, similar to the enhanced new housing rebate, for new residential rental properties.
• For new homes constructed in full or in part prior to July 1, 2010 that are subject to the HST on or after July 1, 2010, a PST transitional housing rebate is available to provide relief in respect to the PST embedded in the home.
• HST will not be applicable to a used residence for re-sale.
• For those who sell their home in Ontario, there will be a 13 per cent tax payable on the real estate commission (an eight per cent increase on top of the current five per cent.).
• Lawyer’s fees will also be subject to the 13 per cent HST in Ontario, as will the cost of a Condominium Status Certificate, however the total cost of that status certificate will remain at $100.
• Moving costs, the cost of a home inspection and even home staging will increase to reflect the HST.

There will be some room to discuss whether you will owe HST on the commission paid when you buy or sell a home in Ontario. Each individual transaction will need to be reviewed and a decision made on the particular circumstances surrounding the sale or purchase. Stay tuned here, for the most up-to-date information.

For now, most are over the shock and are returning their interests to thier own pocketbooks and investments. What does the job and income situation look like? Are financial plans still intact? What about that mortgage coming due next month?

Do you dread your mortgage decision? Despite the signs of an impending rise in the general level of interest rates and warning from government officials, there still seem to be a lack of conviction among Canadians as to whether they should lock in their mortgages at prevailing rates, versus holding on to a floating rate mortgage.  So what are the facts?

Despite the recent jump in rates, we still look to be in the middle of a downward trend in mortgage rates since 1981. Do you remember that year and its five year term that was in excess of 22%? It came at the same time that North America fell victim to a painful double-dip recession. Inflation was sitting around 12% at the time. Many families lost their homes, but today we are in just as precarious a situation as households are holding a much higher debt ratio than we were in the past and that makes us more susceptible to disaster.

The prime rate hasn’t budged from 2.25%, set in April, 2009, so your variable rate mortgage is still an attractive option. Many lenders are offering a variable rate that is tied directly to the prime rate, thereby saving homeowners choosing this route to really take advantage and pay down their mortgages early. The five year rate, however, has been a different story. Conventional five-year rates (posted rate) fell to a low on 5.25% in April, 2009, only to increase to 5.85% throughout the summer, then we saw a reprieve in the early months of this year. That all changed toward the end of the first quarter as the economy was looking better and inflation fears began to creep back in to the market. The mortgage rates went from a low of 5.35% in March to a high of 6.25% by late April. There has now been a 15 basis point reprieve to 6.1%.

So what is the point of all this? Whether you choose a fixed or variable rate (or a combination of the two) mortgage, there are plenty of options out there for you. And with the real estate market in the Durham Region strong, very strong; 819 sales in February, 1,110 in March and 1,185 in April, you might want to consider a move, whether it be into your first home or into your perfect retirement place. I have access to mortgage rates much lower than the posted rates. The variable rate is 1.65% and the five year fixed rate is 4.25%. Very attractive considering the current posted and discounted rates! Contact me to find out more details.

The good news, and yes, there is good news, is that most of us will not be significantly impacted by the latest changes. The intention of the new rules is to curb speculation housing and encourage homeowners to use their homes as a savings tool, rather than borrowing home equity to pay down loans and credit cards.

The first new rule is that minimum down payment requirements for non-owner-occupied homes will increase to 20% from the previous 5%, and the way that rental income is considered will be scaled back from a maximum 80% offset to 50% added to income. With 20% down, most rental property applications will be approved with conventional guidelines, so it will ultimately come down to the lender’s own policy.  This rule is expected to have the most dramatic impact of the three changes, but only applies to the real estate investor.

All borrowers will have to meet qualification standards for a five year fixed rate mortgage even if they choose a mortgage with a lower interest rate and a shorter term. This is the second new rule. Previous standards for mortgage qualifying were typically based on a lender’s three year fixed rate (if you were opting for a variable rate, home equity line of credit, or a 1 or 2 or 3 year fixed rate product. This qualifying standard has, in the past, been sufficient to protect consumers from rates increasing over the term. Essentially, the governments is forcing people to prepare for a likely rate hike over the next five years. Considering that the average different between discounted three and five year fixed rates is only .3 and .49 %, this should not have a drastic impact on the average mortgage applicant. However, if the banks are forced to use the posted five year rates, we will see a difference of more than 2% and that could impact qualifying for buyers.

The final new rules is a change in the maximum amount Canadians can withdraw when refinancing their mortgages. This amount has been reduced from 95% to 90% of the value of their homes. This final change will likely have the most impact on those Canadians who have a current government-backed insured mortgage and would like to take advantage of the equity in their homes to consolidate debt in their future. In recent times, it’s been advantageous for homeowners to roll their unsecured debt into their mortgage to decrease monthly payments – so much so that the government has sought an end to this trend of high loan-to-value mortgages.

Only time will tell if the governments measures to curb spiking house prices and encourage equity savings will be a positive change for Canadians.