Tuesday, December 18, 2007

First-time buyers of resale homes to benefit from new tax measure

The McGuinty government is giving all first-time homebuyers a break on land transfer tax by proposing to expand the Land Transfer Tax Refund Program to include purchases of resale homes, Finance Minister Dwight Duncan announced today.

“Expanding this Land Transfer Tax refund is an important part of our government’s commitment to helping Ontarians buying their first home,” Duncan said.

Effective December 14th , first-time buyers of resale homes, as well as newly constructed homes, would be eligible for a refund from the provincial government of up to $2,000 of the Land Transfer Tax paid.

The expanded Land Transfer Tax Refund Program for First-time Homebuyers is part of a package of new tax initiatives announced in the 2007 Fall Economic Outlook and Fiscal Review that would provide $1.4 billion in provincial tax relief for business and people over three years. The government is making strategic investments in people, communities and infrastructure to strengthen Ontario’s economic advantage and help manufacturers and other sectors challenged by current economic conditions.

For more information please visit: http://www.gov.on.ca

Friday, November 9, 2007

CAAMP Survey reveals 81% of Canadians satisfied

Canadian Association of Accredited Mortgage Professionals survey shows
longer amortization and flexible terms keep mortgage industry buoyant

The vast majority of Canadians (81 per cent) are happy with the terms of their mortgages thanks in large measure to “good interest rates” and longer amortization options, according to a report released today by the Canadian Association of Accredited Mortgage Professionals (CAAMP). Significantly, thirty seven per cent of Canadians who have taken out a mortgage in the last year have chosen amortization periods of more than 25 years. The information was gathered by Maritz from an online survey of 2,000 Canadians in late September and analyzed in conjunction with CAAMP economist, Will Dunning.

While mortgage rates continue to be the most common factor consumers use to rate satisfaction with their mortgages, consumers are clearly pleased with the many new alternatives they have. Fifty-eight per cent cited more choice for payment options and mortgage terms as reasons for being satisfied with their current mortgage.

“Canadians, particularly first time homeowners, are looking for lending products that can help them enter the market as prices continue to rise,” said Jim Murphy, AMP, President and CEO of CAAMP. “Alternative lending products, such as longer amortizations, with the option to renegotiate terms, are keeping the housing market accessible to a wider range of investors.”

Most Canadians chose their mortgage lender because of the rate offered and most said they sought two or less quotes, suggesting that at least on rates, there is not much difference among institutions. The number of Canadians who have consulted with a mortgage broker remained unchanged from last year at 28 per cent; however for those new mortgages taken out during the last year, the number consulting mortgage brokers rises to 43 per cent. The majority of Canadian mortgage holders continued to consult with one of the major banks when taking out a mortgage.

The survey asked Canadians about the turmoil in the United State’s sub-prime mortgage and housing markets. Most Canadians said they are aware of the events, and that they are concerned about them to varying degrees. However, they see little impact on themselves – even among those who are concerned to some degree, 58 per cent said that the changes in the U.S. have had no effect on their recent decisions.

“Canadian homebuyers are a sophisticated and savvy group,” said Andrew Moor, AMP, CAAMP Chairman. “They have a risk management attitude. Canadians understand that our mortgage market remains strong and stable, even as they continue to keep a close eye on interest rates.”

Growth of residential mortgage credit continues to accelerate – during the past two years, it expanded by an average of $77 billion per year, or 11.4 per cent per year. The volume of residential mortgage credit outstanding is forecast to grow by 11.7 per cent in 2007, 9.3 per cent in 2008 and 8.4 per cent in 2009. Total mortgage credit is projected to reach $963 billion by the end of 2009 and will surpass $1 trillion during 2010.
The mortgage market’s expansion in recent years is related to strong housing market activity. The volume of sales more than doubled (rising by 144 per cent) in the six years from 2000 to 2006, for a growth rate of 16 per cent per year – resulting in a rapidly rising requirement for mortgage financing. Over the same period, outstanding residential mortgage credit expanded at a rate of 8.9 per cent per year.

Canadian attitudes towards buying a home varied according to their locations. Those most negative pointed to high house prices. Those most positive cited low interest rates. When asked if “now is a good or bad time to buy a home in your community,” British Columbians were slightly less positive about buying than a year ago while Saskatchewan and Alberta were the only two provinces where a majority gave a negative response (60 and 59 per cent respectively) reflecting the heated housing markets in those two provinces. In the East, Quebec and Ontario, respondents were more positive about buying at this time.


Established in 1994, the Canadian Association of Accredited Mortgage Professionals (CAAMP), formerly the Canadian Institute of Mortgage Brokers and Lenders, is Canada’s national mortgage industry association. CAAMP has assumed a leadership role in the industry it serves and has set the standard for best practices for Canada’s mortgage practitioners. In 2004, CAAMP created the Accredited Mortgage Professional (AMP) designation as part of an ongoing commitment to increasing the level of professionalism in Canada’s mortgage industry.

As a membership-based organization, CAAMP strives to develop its network of professionals and to represent the interests of these individuals to government, media and consumers.

CAAMP has attracted over 10,000 members and 1,100 companies from across Canada – representing over 90% of Canada’s mortgage activity. CAAMP members make up the largest and most respected network of mortgage professionals in the country. CAAMP's membership base consists of mortgage lenders, brokers, insurers and other industry participants.

CAAMP’s other primary role is that of consumer advocate. On an ongoing basis CAAMP aims to educate and inform the public about the mortgage industry. Through its extensive membership database, CAAMP provides consumers with access to a cross-country network of the industry’s most respected and ethical professionals.

In September/October 2007, Maritz Research conducted a 21-question telephone survey with 2,000 Canadian consumers. A sample of 2,000 Canadians ensures an accuracy of + 2.2%, 19 times out of 20.

A copy of the complete 39 page survey email anyone of the Ontario Mortgage Team Professionals at:

Thursday, October 25, 2007

Canadian Boomer Resilience: 84% Not Scared Off Real Estate Despite U.S. Housing Downturn

21% of Canadian baby boomers plan to make a real estate purchase in the next three years, according to a recent Mortgage Intelligence survey -

Eight out of ten (84%) Canadian baby boomers, aged 41-61, state they are not hesitant to consider a real estate purchase despite U.S. housing market volatility, according to a new online survey by Angus Reid Strategies on behalf of Mortgage Intelligence Inc. In fact, 21% of boomers surveyed anticipate making a real estate purchase in the next three years; 63% are not apprehensive about Canadian real estate, but have no plans to purchase within three years; 6% are not considering a Canadian real estate purchase because of the U.S. housing decline; and 10% do not know how they feel about Canadian real estate.

“Canadian boomers are a savvy bunch, and our survey indicates that despite the turmoil in the U.S., they clearly understand the long-term value of real estate,” said John Schipper, President, Mortgage Intelligence Inc. “With approximately 2 million boomers planning to buy a home within the next three years, this segment will be a major driver of the Canadian real estate market.”

Results from two polls commissioned by Mortgage Intelligence, a leading Canadian mortgage brokerage, shed light on some interesting Canadian baby boomer real estate trends:

24% of younger boomers (between the ages of 41 and 54) are more likely to have plans to purchase real estate in the next three years versus 13% of older boomers (between the ages of 55 and 61). (Angus Reid Strategies).
17% of those interested in purchasing real estate are most interested in investment properties, followed by 15% who want to downsize. (Corporate Research Associates).
More younger boomers are looking for out-of the box solutions for generating additional disposable income, including real estate investments observes Barry LaValley, founder and president of the Retirement Lifestyle Centre and Special Advisor to the Scotiabank Group.“ A sub-element of the investment real estate boom is the ‘tear down’ property market. Boomers are seeking out inexpensive properties that can be dressed up and resold for a profit,” said LaValley.

“Real estate clearly remains an important investment strategy for boomers as they plan for their retirement years,” said Schipper. “Every day, our mortgage consultants work closely with these clients to offer consultative service, knowledgeable advice and flexible mortgage solutions to meet their changing lifestyles.”

About the survey
The first poll was conducted by Angus Reid Strategies on September 25, 2007 among a representative sample of 490 Canadian boomers. The results are based on two-sided tests with significance level 0.05. The second poll was conducted by Corporate Research Associates Inc. in a nationwide study of 1,000 baby boomers across Canada between August 10 to September 4, 2007. An overall sample of 1,000 drawn from the population would expect to provide results accurate to within plus or minus 3.1 percentage points 19 times out of 20.

About Mortgage Intelligence Inc.
Mortgage Intelligence Inc. is among the largest and fastest growing mortgage brokers in Canada, with more than 1,000 independent consultants and associates in offices across Canada. Mortgage Intelligence consultants help clients make better mortgage decisions for their home, revenue or vacation properties, renewals, home renovations, debt consolidation needs, and specialized mortgage requirements. The company had funded volumes in excess of $7.8 billion in fiscal year 2006. For more information, visit: www.OntarioMortgageTeam.com

Tuesday, October 16, 2007

Bank of Canada keeps target for the overnight rate at 4 1/2 per cent

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 4 1/2 per cent. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 4 3/4 per cent.

Against a backdrop of robust global economic expansion and strong commodity prices, information received since the July Monetary Policy Report Update (MPRU) indicates that the Canadian economy is now operating further above its production potential than had been previously expected. The core rate of inflation, which has been above 2 per cent for the past year, was 2.2 per cent in August. Total consumer price inflation fell temporarily in August to 1.7 per cent, having been above the 2 per cent inflation target since the spring.

Since the July MPRU, the outlook for the U.S. economy has weakened because of greater-than-expected slowing in the housing sector. The Bank has revised down its projection for U.S. growth to 1.9 per cent in 2007 and 2.1 per cent in 2008. U.S. growth is expected to pick up to 3 per cent in 2009.

The Canadian dollar traded in a range of 93 to 95.5 cents U.S. in July and August, but since then it has appreciated sharply to as high as 1.03 dollars U.S. In the Bank's new base-case projection, the Canadian dollar is assumed to average 98 cents, the mid-point of the range since the July MPRU. As well, there has been a tightening of credit conditions stemming from the financial market developments this summer. For Canada, the Bank assumes that the cost of credit for firms and households relative to the overnight rate will be 25 basis points higher over the projection period than it was prior to the summer developments.

Despite these tighter credit conditions, momentum in domestic demand in Canada is expected to remain strong. The combined effect of a weaker U.S. outlook and a higher assumed level of the Canadian dollar implies, however, that net exports will exert a more significant drag on the economy in 2008 and 2009 than previously expected. As a result, the Canadian economy is projected to grow by 2.6 per cent in 2007, 2.3 per cent in 2008, and 2.5 per cent in 2009. This growth profile implies that aggregate supply and demand will move back into balance in early 2009. Both core and total CPI inflation are projected to return to 2 per cent in the second half of 2008.

In line with this projection, the Bank judges, at this time, that the current level of the target for the overnight rate is consistent with achieving the inflation target over the medium term.

There are significant upside and downside risks to the Bank's inflation projection. On the upside, excess demand in the Canadian economy could persist longer than projected. This could come from two sources: higher growth in household spending than projected and lower growth in productivity than assumed. On the downside, if the Canadian dollar exchange rate were to persist above the 98 cent U.S. level assumed over the projection horizon for reasons not associated with stronger-than-projected demand for Canadian products, Canadian output and inflation would be lower. In addition, the effect of the past appreciation of the Canadian dollar on demand and inflation could be stronger than expected and the effect of the weakness in the U.S. housing sector could be greater than anticipated. All factors considered, the Bank judges that the risks to its inflation projection are roughly balanced, with perhaps a slight tilt to the downside.

A full update of the Bank's outlook for growth and inflation will be set out in the Monetary Policy Report, to be published on 18 October 2007.

Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 4 December 2007.

For current market conditions and up to date rate: www.OntarioMortgageTeam.com

Tuesday, September 18, 2007

Why are Adjustable Rate Mortgage rates on the incease?

Please be aware that there is significant pressure to increase interest rates on Adjustable Rate Mortgages.

The current pricing environment of rates as low as Prime -.90% may not be available for much longer. Some ARMs in the market have already changed to Prime -.50%, a 40 bps increase and I would like to take this opportunity to explain what is happening in the markets today that has caused this shift in product pricing.

In layman's terms, what is happening?

Adjustable Rate Mortgages are typically priced according to the current 30-day Banker Acceptances (BA), which are a very common short-term money market investment, guaranteed by the banks. A lender funding adjustable/variable rate mortgages would typically borrow money through a 30-day Banker's Acceptance. The lender is then responsible for paying the yield (rate of return) to the investor who purchased the BA. This yield is the cost of funding mortgages ("Cost of Funds") to the lender.

So, what's happening to the BA yields?

This is where the story has become interesting over the past few months.

The failure of the U.S. subprime market worried money-market investors. In Canada, investors began to sell off investments creating a strain on the market. Those who remained demanded higher yields from the BA market as no one was sure as to how much of these BA's were used to finance U.S. subprime mortgages, or subprime mortgages here in Canada or other risky ventures. Everyone was asking the same thing: What's the risk exposure? A classic example of the market overreacting.

The resulting increase in BA yields increased the cost of funds for lenders who want to finance their Adjustable Rate Mortgages. Essentially it's costing lenders much more money now to finance ARMs than it did 60 days ago.

The following is a comparison of 30-day Banker's Acceptance yields over the past 60 days:

July 17, 2007: 4.54%
August 3, 2007: 4.60%
August 14, 2007: 4.75%
August 17, 2007: 4.92%
September 11, 2007: 4.98%
September 17, 2007: 5.04%

*Source: Bank of Canada (http://www.bank-banque-canada.ca/)

So, in 60 days we've seen the yield on 30 day BA increase 50 bps.

Now consider the interest rate earned by the lenders on an ARM at Prime - .90%. Today that interest rate is 5.35%. When you compare this to the current Cost of Funds at 5.04%, which doesn't include overhead, profit margin, one can see that it's only a matter of time before prices for ARMs need to change.

How long will this continue?

Are we seeing the end of the days of Prime - .90%? Perhaps for a while, until the money markets settle down.

The silver lining in all this is that due to Canada's continued economic expansion and the reality of an $80+ barrel of oil, our longer term bonds are in high demand. As a result, we might see some interest rate decreases on the fixed rate products.

If you wish further information on how to protect yourself against further increases in rates contact the Ontario Mortgage Team Professional nearest you.

Wednesday, September 5, 2007

Bank of Canada keeps target for the overnight rate at 4 1/2 per cent

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 4 1/2 per cent. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 4 3/4 per cent.

Near-term prospects for economic growth outside North America appear to be slightly stronger than anticipated in the July Monetary Policy Report Update (MPRU), while near-term economic prospects for the United States are weaker than expected. It now seems likely that the adjustment in the U.S. residential housing sector will be more pronounced and protracted, exacerbated by recent developments in financial markets. On balance, this implies weaker demand for Canadian exports than had been expected at the time of the July MPRU.

In Canada, total and core CPI inflation in July, at 2.2 per cent and 2.3 per cent respectively, continued to be above the inflation target but generally in line with the Bank's expectations. The Canadian dollar has also largely traded in the range assumed in the July MPRU. At the same time, the pace of economic growth in the first half of this year was above the Bank's expectations. It now appears that the Canadian economy is operating further above its production potential than was estimated in July. Domestic demand remains robust, buoyed by a continuing strong labour market and higher-than-expected increases in home sales and prices. However, recent developments in financial markets have led to some tightening of credit conditions for Canadian borrowers, which should temper growth in domestic demand.
Against this background, the Bank judges that the current level of the target for the overnight rate is appropriate. However, there are significant upside and downside risks to the outlook for inflation. On the upside, there is a possibility that household demand in Canada could be stronger than anticipated, while on the downside the ongoing adjustment in the U.S. housing sector could be more severe and spill over to the U.S. economy more broadly. In addition, there is uncertainty about the extent and duration of the tightening of credit conditions in Canada and, hence, about the tempering effect this will have on growth in domestic demand.

The Bank will continue to closely monitor evolving economic and financial developments. A full update of the Bank's outlook for growth and inflation, including risks to the projection, will be set out in the Monetary Policy Report, to be published on 18 October 2007.

Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 16 October 2007.

Wednesday, July 18, 2007

TransUnion report, the impact of your credit score on the true cost of your mortgage

Personally I think it is just as much an issue of lack of education on the part of the clients Lenders as it is lack of knowledge on the part of the respondents. Regardless the "price matrix" as a result of your Credit Score can cost the YOU thousands of dollars in extra interest charges. Here is the Canada News Wire release:

TORONTO, July 18 /CNW/ -- Do Canadians really know how much a mortgage will cost them? With the summer home buying season now in full swing, TransUnion recently commissioned GfK Roper Public Affairs & Media to survey consumer perceptions and attitudes about mortgages. The findings indicate that 45 per cent of Canadians underestimate the lifetime cost of a mortgage.

Only one-fifth of respondents correctly answered that due to interest payments, the average Canadian homeowner will ultimately pay in the range of 151 to 200 per cent of the original loan amount over the course of a 25-year mortgage.

"By the end of a 25-year term, if you a have a traditional fixed-rate mortgage at 6.43 per cent, you'll actually pay close to $200,000 on top of your $200,000 mortgage, just in interest," says Tom Reid, director, Consumer Solutions at TransUnion.ca. "That's a significant cost that could be reduced by tens of thousands of dollars if you have a higher credit score in hand when you go to secure your home loan."

Perceptions Similar across Demographics, with Education Proving the Exception

Surprisingly, home ownership makes no difference for mortgage loan knowledge. Only one in five home owners (20 per cent) gave the correct answer for true mortgage costs, identical to the 20 per cent among those who rent or live at the home of their parents. Similarly, 19 per cent of men and 20 per cent of women correctly identified the 151-200 per cent figure.

However, education level does seem to make a significant difference. Among those who completed no more than grade school, just 5 per cent chose the correct response, rising to 15 per cent among those who completed high school and to 25 per cent among those with at least some college education. Still, even among the most educated Canadians, just one in four gave the correct response.

"Reviewing your credit profile and score frequently and taking steps to maintain or improve your credit standing puts you in the driver's seat when shopping for a loan," adds Reid. "All else being equal, the higher your credit score, the stronger your position to negotiate lower mortgage or home equity rates. That's a fact you can bank on."

For more information on your credit score and how it will impact your mortgage contact:

Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage

web: www.OntarioMortgageTeam.com

Tuesday, July 10, 2007

Bank of Canada raises overnight rate target by 1/4 percentage point to 4 1/2 per cent

OTTAWA – The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 4 1/2 per cent. The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 4 3/4 per cent.

Economic growth and inflation in Canada in the first half of this year have been stronger than expected in the April Monetary Policy Report (MPR). Final domestic demand has remained the key driver of economic growth in Canada, bolstered by firm commodity prices. The Bank judges that the economy is now operating further above its production potential than was projected at the time of the April MPR. Both total CPI and core inflation have been higher than projected in April and are above the 2 per cent inflation target. Longer-term interest rates have increased and the Canadian dollar has appreciated sharply, moving well above the trading range assumed in the last MPR.

The Canadian economy is now projected to grow by 2.5 per cent in 2007, somewhat stronger than was expected in April, and to grow somewhat more slowly in 2008 and 2009 than previously projected. In this new projection, higher interest rates across the yield curve and a higher assumed range for the Canadian dollar of 93 to 95.5 cents U.S. act to moderate growth in 2008 and 2009 to an average of about 2 1/2 per cent. This brings aggregate demand and supply in Canada back into balance in 2009.

Inflation is projected to be slightly higher and more persistent than in the April MPR. However, as excess demand diminishes, total CPI and core inflation should decline to 2 per cent by early 2009.

There are both upside and downside risks to the Bank's inflation projection. The main upside risk is that household demand in Canada could be stronger than expected. The main downside risks are related to the higher Canadian dollar and the ongoing adjustment in the U.S. housing sector. In the context of the Bank's new projection, these risks appear to be roughly balanced.

In line with this outlook, the Bank is raising the target for the overnight rate to 4 1/2 per cent. Some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term.

An analysis of the Bank's outlook for growth and inflation, including economic and financial developments and risks to the projection, will be set out in the Monetary Policy Report Update, to be published on 12 July 2007.

Information note: The Bank of Canada's next scheduled date for announcing the overnight rate target is 5 September 2007.


For more information on this and other money saving strategies contact:

Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.

Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and Apply On-Line at:

Tuesday, June 12, 2007

A Gentleman offers you $11,000 for your medium double double

Just imagine - as you're going through your favourite coffee drive-thru this week - that a well-dressed gentleman stops and offers you $11,000 for your medium double double. Who would hesitate? We'd take the cash. It's not so far-fetched. In fact, if you take that coffee budget and apply it to your monthly mortgage payment - a mere $30 extra per month -you could save yourself about $11,000 over the life of your mortgage.

Most of us can accept the idea that we must borrow money to purchase a home. We look for the best mortgage, and then just keep doling out the money for as long as it takes to pay it off. Most Canadians choose to amortize their mortgage over 25 years. That's a long financial commitment, and it could more than double the cost of your home. But with good planning - and a few smart tactics - you should be able to enjoy your mortgage-burning party much earlier.

Here are a few strategies for fast-tracking your mortgage:

1. Increase your monthly payments. Rather than choosing your amortization period first, ask yourself how much you can afford each month. For example, you may feel that you can afford $1,000 per month. You're delighted when your $125,000 mortgage only demands an $800/month payment (at a 6% interest). But make a monthly payment of $1,000 instead, and you'll shave 8.75 years and almost $46,000 off your total interest cost.

2. Take advantage of lower rates. In addition to reducing the overall interest component of your mortgage, you can take the opportunity to pay down more principal faster - simply by maintaining your original payment. You should even increase your payment if you can, to reap the benefits of the cheapest mortgage money in memory. Again, you could take years - and thousands of dollars -- off your mortgage.

3. Tie mortgage payments to your pay schedule. Many Canadians are paid on a bi-weekly schedule. If you accelerate your payments to bi-weekly instead of monthly, you could improve your own cash flow and fit in an extra payment each year. That means that you're paying off principal faster - leaving you with less interest to pay overall. It doesn't seem like much but - like putting your coffee budget to work - the bi-weekly strategy can have you mortgage free four years sooner, with almost $22,000 in savings.

4. Use any bonuses, tax refunds or "found money" to pay down principal. This is especially valuable in the early years of your mortgage. If you receive an annual bonus or other lump-sum compensation, see if you can put it against the principal. An extra $1,000 per year is a great way to fast-track to mortgage-free!

5. Consolidate your loans into a new mortgage and use the savings to boost your payments. If you're a homeowner with some equity, you can use your mortgage to consolidate your other loans: student loans, car loans, etc. Add the money you've been spending on loan payments to your mortgage payments, and you could see big savings in overall interest.

With mortgage rates at historic lows, you should take the opportunity to get an expert mortgage analysis from an independent mortgage broker with access to mortgages from a wide spectrum of lenders. You've got a great opportunity to put some fast-track tactics in place. You'll remember what a good decision you made at your mortgage-burning party.

For more information on this and other money saving strategies contact:

Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.

Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and Apply On-Line at:

Tuesday, May 29, 2007

“Subject to sale” clause requires a reality check

It’s been a ball, hasn’t it? The real estate market has been so hot for so long, we can hardly believe what houses are selling for these days. Everyone’s got a story about a friend or neighbour who got some fantastic price for a home. However there are some down sides to an up market. Among other things, buyers and sellers with stars in their eyes don’t always act rationally. We all want to believe that we can strike a big win in a hot real estate market. And sometimes we do.

But when we pin those hopes to a ‘subject to sale” clause in an Offer to Purchase, those hopes need to be accompanied by a solid reality check.

Here’s what can happen if you’re the buyer: You’ve found the home of your dreams, and while they’re asking a pretty penny for the place, you’re not really worried because your current home is also expected to sell very well. After all, the neighbours are still talking about how much the family around the corner got for their place last year! You put in a great offer on the house of your dreams, and use a “subject to sale” clause to give yourself a few months to nab a good price for your own place. Sure, you could have offered the vendor a lower price, but you can’t “go cash”, and you want to offer a price that’s attractive enough to make it worth the vendor’s while to wait for you, while you hope it all works out.

You might both be lucky: the home you’re buying might be worth what you’re offering, and your own home might be worth what you hope. And the banks might agree with your assessment of the value of both. But that’s a lot of “might”s. If you don’t get the price you want for your own home, are you prepared to honour your Offer to Purchase? Or will you need to scramble financially or plead with the vendor to negotiate a lower price? And what if the vendor is similarly counting on the offered price to purchase his or her next home? When your high hopes are disappointed, the result can be a nerve-racking and even ruinous game of financial dominoes that leaves lenders, brokers and several sets of homeowners in a cold sweat.

What if you’re the vendor? A buyer has paid you the compliment of a very attractive offer on your home – “subject to sale” of their own home, of course. Usually, an offer which contains a “subject to sale” clause requires a longer completion date so the buyer has a reasonable amount of time to capture a good price for his own home. The immediate result, then is that your home will be generally considered “off the market” during this period of time, and other buyers
will look elsewhere for a home which is clear of existing offers. Sure, you can entertain other offers, but an existing offer always puts a damper on interest – particularly if the offered price seems a little high.

The result is that your perfect buyer may not even get through your front door. And while it’s flattering to get a great offer on your home, keep in mind that you don’t have the money in your hand yet. A buyer who has unrealistic expectations about what his own house may sell for, could also have offered you an unrealistic price for yours. If he is disappointed on his own sale, you can expect to be disappointed on yours. Your buyer may either be forced to collapse the Offer to Purchase. or come back to negotiate for a lower price – after you’ve spent a few months of missed opportunities with other buyers.

These “subject to sale” clauses don’t need to be an obstacle to a smart and realistic transaction. But in a strong real estate market, optimism sometimes overcomes good sense. Before either offering or accepting a “subject to sale” clause in an Offer to Purchase, do a reality check. An independent mortgage broker can explain the consequences for both buyers and sellers, and help you chart the best course for your own financial situation.


For more information click here for the Ontario Mortgage Team Professional nearest you:

Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage

Purchase * Refinance * Cottages * Investment
Click here for FREE Information and apply on-line

Thursday, May 17, 2007

One in four Canadians aim to buy a recreational property

The un-official start to the cottage season is here, and as Canadians look for ways to make the most of their summer, many are looking to the country's hot recreational property market to maximize their seasonal enjoyment. And, even as prices continue to rise and more people turn to a mortgage provider to realize their vacation property dreams, consumers still want to pay down their mortgage as quickly as possible.

According to a recent poll conducted on behalf of Mortgage Intelligence Inc. and GMAC Residential Funding of Canada Limited:

> One in seven Canadians (14 per cent) currently own a vacation property and one in four (28 per cent) would like to purchase a vacation property in the future.
> Forty-one per cent of vacation property owners are over the age of 55, while 47 per cent of those who wish to purchase are between the ages of 35 and 54.
> Fifty-four per cent of Canadians would like to pay down their vacation property mortgage in 15 years or fewer. This is particularly true of retirement-age Canadians, with 83 per cent of those aged 55- plus preferring to pay down their mortgage within this time frame.
> Significant regional preferences exist for the types of recreational properties people wish to buy:
> Consumers in Quebec prefer to purchase chalets (39 per cent).
> Forty-nine per cent of people in Ontario wish to purchase a waterfront property.
Waterfront properties are also most popular in British Columbia (39 per cent), Manitoba / Saskatchewan (47 per cent) and the Atlantic Provinces (30 per cent).
People in Alberta prefer all-season properties (32 per cent).
> Most people in Alberta (69 per cent), and many in Manitoba/Saskatchewan (40 per cent), Ontario (39 per cent) and Quebec (45 per cent) plan to use 11 to 20 per cent of the purchase price as a down payment for their recreational property, while 47 per per cent of people in British Columbia and 54 per cent of people in the Atlantic Provinces plan to use more than 20 per cent.

"A growing number of Canadians are factoring a vacation property into their retirement planning and are looking for flexible mortgage solutions that will enable them to buy the property they want and retire with financial peace of mind," says Stan Falkowski, President, Mortgage Intelligence Inc. "These are hard-working Canadians who want to enjoy their retirement without making mortgage payments for years on end."

In the past, financing for a recreational property has been more challenging than for a principal residence, as traditional lending institutions have found second homes to be a less than desirable investment. But as the recreational property market continues to grow across the country, fuelled by affluent Baby Boomers preparing for their retirement years, consumers are finding they have other options that provide the flexibility and payment options that will help them pay down their mortgage faster. With a recreational property mortgage like irelax, consumers can purchase a vacation property with as little as 15 per cent down and take advantage of up to 20 per cent prepayment and up to a 20 per cent increase in payments annually.

"Vacation properties are more than just a financial investment for most Canadians. They quite often become the spot where families come together," adds Falkowski. "While recreational property mortgages are still relatively new to the market, a product like this provides an easy and affordable way to start a whole new string of family traditions."

The poll was conducted by Angus Reid Strategies between May 9 and May 10, 2007 among a representative sample of 1,046 adult Canadians. The results are accurate to within plus or minus three percentage points, 19 times out of 20.


For more information click here for the Ontario Mortgage Team Professional nearest you:

Ontario Mortgage Team
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Thursday, May 3, 2007

Stability in the money market

Here is some historical data on Canadian Prime Rate I thought you'd find interesting.

If the Prime Rate remains the same for the next two weeks, it will have been 6.00% for a full year. The last change was May 17th, 2006.

The Prime Rate has not been that stable (over a 12 month period) for 34 years, not since April 1973.

Other periods of note where the Prime Rate has been stable for periods of up to 11 months.
1983 - 1984 Rate - 11.0%
1989 - 1990 Rate - 13.5%
1996 - 1997 Rate - 4.75%
2004 - 2005 Rate - 4.25%

The record, which is in very little threat of ever being broken, is 4.50% from November 1944 to March 1956. That's 11 year and 5 months following the war.

For more information contact the Ontario Mortgage Team Professional nearest you

Ontario Mortgage Team
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Monday, April 30, 2007

Changes to Federal Legislation affecting High-Ratio Mortgages

Recent federal legislation has increased the maximum loan to value ratio under which conventional lending can be done in Canada without a requirement for mortgage insurance.

An amendment to the Canadian Bank Act came into effect on April 20, 2007, which increases the threshold for mandatory mortgage default insurance on residential real estate secured loans to 80% loan-to-value ratio (LTV) from 75% LTV. Mortgage default insurance in the 75.1% to 80% range is no longer required by Law.

Why is this great news? It makes home ownership more accessible as the purchaser will no longer have to work to build up a 25% down payment in order to save the cost of mortgage insurance premiums. The reduced requirement of 20% will put home ownership within reach for more clients and sooner than before this change.

On a Purchase Price of $250,000 the savings on insurance premium is approx $2,500. a fee that will no longer be added to the mortgage also reducing the interest charges on that same amount over the amortization of the mortgage.

For details on this and other innovative borrowing strategies contact:

Ontario Mortgage Team
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Tuesday, April 10, 2007

In every child's first drawing of a house, what do you see?

A modest home, a front path lined with flowers, smoke coming from the chimney, and yes -- a tree. We all have our favourites - trees to hold a swing, to provide shade, to fill a view, to freshen the air, or just to send our eyes skyward.

Trees are embedded in our human imagination. We'll be coming up to tree-planting season again. Here are just a few reasons why you should consider planting a new tree, or to take really good care of the trees you already enjoy:

• Beauty. "I think that I shall never see a poem as lovely as a tree." Do you remember reading this is high school? Plant a tree for the sheer beauty of it.
• Spirit. Urban planners say that trees bring out the best in people. We know that a tree-lined street is more inspiring and feels more friendly than a bare one. The tree-huggers are on to something.
• Oxygen. The green lungs of our neighbourhood, town, country, continent, hemisphere, and planet -- trees give us the necessary air of life. We need more of them. If you need to remove a dying tree, make a plan to plant one somewhere as a replacement.
• Cleanse. Trees help remove carbon dioxide and other pollutants from our atmosphere. We need trees to do this for us - more now than ever. There is always fresh air in the forest. No coincidence. Thank the trees.
• Cool and shade. Trees can lower the air temperature around your home by many cooling degrees on those hot summer days. Not only do they provide much needed protection for you, your family, and your shade-loving pets, but they also emit cooling moisture into the atmosphere.
• Windbreak. If you plant evergreens on the north side of your home, you can save energy dollars in the cold season. These stately trees provide a lovely backdrop for your summer garden, and when snow-laden in the winter - they look especially grand.
• Prevent soil erosion. The root systems of trees will hold your soil in place - something to think about if you have steeper gradients on your property.
• Natural habitat. Without our trees, where would birds and other creatures hang out? Plant a tree and watch for the arrival of the songbirds.
• Increase property value by up to 10 percent. Yes, that's right. 10 percent. More in some cases, and that adds up to a lot of dollars.
• Privacy. Screen yourself from traffic, unsightly views, and neighbours whose property is too close. Trees will also buffer sound: reducing some of the undesirable traffic, train, and mechanical noises, which surround us.
• Autumn. What would our favourite season be without the glorious display of our deciduous trees? Yes, raking the leaves can be a chore, but it's worth it.
• Go native. If you need to plant or replace a tree - select a native species. You'll find that native trees are: less susceptible to pests and disease, don't need as much water, and are altogether much less demanding than non-native species. Ask a local arborist (your city or town usually employs one) to recommend a tree for your property.
• Natural legacy. Plant trees for your children, your grandchildren, and your great-grandchildren. Celebrate weddings, births, anniversaries and other special occasions with a tree.

Take the time to enjoy pushing your loved ones on a rope swing or just sit in the shade of your tree while you read your children Dr. Seuss' "The Giving Tree".


Ontario Mortgage Team
Mortgage Intelligence Inc.
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Tuesday, April 3, 2007

Spring-cleaning your debt could save you thousands

Wouldn’t spring-cleaning be so much more gratifying if – somewhere under dusty barbecue parts and outgrown hockey skates – you found an envelope with, say, $5000 in cash? Wouldn’t that make spring-cleaning worthwhile? Of course it would!

Well, you may not uncover a financial windfall when you’re cleaning the garage this spring, but a little time and attention to the task of spring-cleaning your financial house can be very rewarding. This spring, dust away the cobwebs and take a hard look at your debt servicing costs.

Are you continuously carrying a large monthly balance on your credit card? Or are you making regular use of your overdraft protection at the bank? Worst of all, could it be that you’re carrying a balance on a high interest department store card? Take some comfort in knowing that you’re not alone. However, this particular kind of financial clutter – ongoing, unsecured consumer debt – is both confusing and costly. Guess what? It’s time to spring-clean your debt!

Begin by making a quick list of any loans, credit cards or other unsecured debts. In addition, make a note of the interest rates charged on any outstanding balances. Finally, do a quick calculation of what you have paid in debt servicing costs this winter. Has the tax man sent you a bill? Don’t forget to include that debt in your spring-cleaning project.

Next, take a look at the going mortgage rates, and make an appointment with a mortgage professional. By rolling your other debt into a mortgage-either new or existing-you can reduce the number of payments you’re making each month, you can save big on interest charges, and you can improve your cash flow.

How much difference will it really make? Well it can be as good – or better – than finding the $5000 envelope of cash in your garage. Why? As an example, if you have a $160,000 mortgage at 6%, high interest credit cards and other loans of say $33,000; your total monthly payment could be $2,014.

Now if you took that $193,000 and added on an approximate $3,000 penalty to refinance your mortgage, you may be able to potentially roll that $196,000 into a 5.09% mortgage (OAC, rates subject to change) that could reduce your overall monthly payment to $1,150. That’s a monthly savings of $864.

Your monthly payment has been reduced, you’re saving on interest charges, and all of your high interest credit card debts are gone. Imagine if you funneled some of that cash flow back into your mortgage!

If you have equity in your home -- preferably more than 25% equity – you may want to consider taking advantage of attractive mortgage rates and rid yourself of your financial clutter. Regardless of where you are in the life of your mortgage, talk to a mortgage professional who can analyze your situation and outline your spring cleaning options.

So as you polish the windows, shake out the carpets and clear out the garage, don’t forget the most rewarding task of all: spring-cleaning your debt. Your financial house will enjoy the fresh beginning, too!


Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.
Purchase * Refinance * Renewal * Investment

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