Strata condominiums or townhouses are a popular home options with many benefits including providing little personal maintenance, the ability to live in a more populated area, among others.

10 Things you should know about Condo and Townhouse Strata Properties

1. Each Strata lot typically has one vote.
2. You may have a monthly strata fees which will cover common area maintenance, management expenses, maintain the contingency reserve funds minimum requirements and more.
3. Rules will be in place regarding things such as if pets are allowed, where you can park, what can be placed on your patio, if you can rent the unit and more.
4. Rules can be changed. Typically a 3/4 vote in favour of a change will be required.
5. You can be fined if you break the rules.
6. Age restricted properties are more difficult to finance as lenders believe it affects marketability.
7. The Fire Insurance covered by the strata fees is for common property and buildings. Personal belongings are not covered under the Strata’s insurance.
8. For mortgage qualifications half of the strata fees will typically be used in your debt servicing calculations.
9. Unless a 3/4 vote opposes the requirement for a Depreciation Report a Strata’s with 4 or more strata lots is required to have a Depreciation Reports done every 4 years. The report covers all common areas and structures which help determine long term maintenance requirements and costs.
10. Special assessments where you have to pay lump sum amounts may happen if the strata votes for major upgrades or if contingency accounts need to be topped up.

Always best to do your due diligence by reading through the last two years of strata minutes, the depreciation report and analyze the financial reports before you buy a strata unit. Once you have purchased, be proactive in protecting your investment by attending strata meetings or joining the strata council.

Looking to buy a Strata Property? Get started by contacting your local Mortgage Professional at Dominion Lending Centres!

Courtesy of Kathleen Dediluke, DLC Integrity Mortgage 

Have you found the house of your dreams?

But there is already an accepted offer in place?

OK, but are there outstanding subjects on the offer? Perhaps there’s a ‘subject to sale’ with a 72-hour trigger clause against the potential buyer, and this one condition might still be anywhere from two to six weeks from removal. Why sit back and wait to see what happens over the following weeks?

In a softening market ‘subject to sale’ becomes more common.

Get in the game: write a backup offer.

Over the last few years, more purchase offers have fallen apart due to financing than in the past couple of decades combined. Financing has become that challenging, and few people realize it until they actually write an offer and make the application.

When it comes to mortgage financing, while money never have been cheaper… it’s also never been harder to get.

So, if you find your dream home and it already has an accepted offer, follow through with writing the backup offer anyway. It is not a waste of time for you or your Realtor. Historically clients and Realtors alike may have felt this was a wasted process. No longer!

If you’re the seller, take the time to think through the written offer in front of you before accepting one with an exceedingly long subject removal period of, say, two to six weeks, or an offer containing a ‘subject to sale’ that lasts a month or longer. Keep in mind that despite what I am urging buyers to do, very few will write a backup offer if another offer is already in place. People don’t like to bump other people; it feels confrontational. So in effect you are removing your home from the market whether you think so or not.

These subject-to-sale offers typically have a ‛72-hour clause’. This clause means that if another offer is written, the original buyer has 72 hours to remove all subjects and go firm. Whether they have met these conditions or not, it becomes their decision to roll the dice and follow through with their offer.

As Canadians, we are often very polite, perhaps too polite. We give thanks to those who thank us for thanking them. We apologize when offered an apology. It’s the Canadian way.

And so, we don’t really want to trigger the 72-hour clause on somebody. We don’t like putting others in uncomfortable situations. The reality for the seller is, if you have a long subject removal offer on your property, it is highly unlikely that anyone else is going to write an offer on it.

Conclusion

As a seller: Be wary of taking placeholder offers laden with long subject removal dates which put you in a position where you are subsequently hoping for a backup offer. You’re unlikely to get one.

As a buyer, write backup offers. If you are serious about the property, don’t be shy about triggering the 72-hour clause. Get your elbows up, get in the game, and make it happen.

Feel free to contact us at Dominion Lending Centres to learn more.

Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts 

The King of Pop made the best-selling album of all time, Thriller (which came out 34 years and two days ago!), with sales of around 65 million copies. Yet in spite of the huge revenues he continued to receive from such recordings, Michael Jackson died broke. How could this be? The answer to this question reveals some important lessons for anyone who wants to achieve long-term financial freedom.

Michael’s main problem was that as his income dwindled in recent years, he never changed his spending habits. In 2005, a forensic accountant testified that Michael was spending $20-30 million more per year than he earned and was in debt by as much as $285 million. In 2001, he borrowed $200 million from Bank of America just to stay afloat. His 2,600 acre private estate, Neverland, cost $5 million a year to maintain and faced repossession twice.

Unfortunately, Michael didn’t understand the difference between good debt and bad debt. Borrowing money to pay for living expenses and possessions that never pay a return is bad debt. It may give you short-term pleasure, but it offers no long-term value.

Instead of buying the latest big screen TV and taking exotic cruises, set more money aside so you can eventually start investing in assets that will increase in value over the long term. Good debt are things that will generate income for you over time. Some examples are borrowing to pay for post secondary education, seminars, books, retirement investments, strategic renovations to your home, or the purchase of a revenue property.

It’s true that Michael did choose some good debt, like buying the rights to 259 Beatles’ tracks. Today, his estate has an estimated value of over $2 billion.

Here’s the key lesson you want to implement. Live within your means and set aside at least 10% of your income to invest in cash flow producing assets. Do this, and you will never have to lose any precious sleep worrying about how you will make ends meet.

If you would like some tips on using the equity in your home to start investing in return-producing assets—so you can enjoy financial security, talk to your Dominion Lending Centres mortgage professional. We can offer objective advice and give you access to innovative, affordable financing so you can position yourself for an abundant future.

Courtesy of Alisa Aragon, DLC Canadian Mountain View 

Starting the journey to homeownership can be overwhelming and stressful. But with a little planning, you’ll get the home that’s right for you. A home that strikes a balance between your “wish list” items and the practical realities of the property, location and the housing market. Before you know it, you’ll have a place to call your very own. A place to entertain. A place to decorate. A place to raise a family. It really is an exciting time!

To help keep you on track, below is a step-by-step guide to buying your first home.

STEP 1 – Build a Budget

An effective budget will map out your plan to set aside money for your down payment and additional costs. It will also help determine the price of home you can afford.

STEP 2 – Investigate Mortgage Options

There are many different types of mortgages. If you don’t have the 20% down payment for a conventional mortgage, you can get a high ratio mortgage, combined with mortgage default insurance, that allows for a smaller down payment. You should be pre-approved for a mortgage before you start house hunting.

Consult with a Dominion Lending Centres mortgage professional to discuss what options are available to you and learn more about how to get started.

STEP 3 – Choose a Realtor

Your realtor will play a vital role in your homebuying experience. The best realtor will be a combination of a personal advisor, consultant and negotiator. He/she will show you homes that match your criteria, guide you through the homebuying process, negotiate the best possible price for your home and deliver your closing documentation.

STEP 4 – Get a Lawyer

It’s important to hire a lawyer who specializes in real estate. You could find yourself in a bidding war for the home you want, and it doesn’t hurt to have a lawyer look over any offer to purchase before you submit it. A real estate lawyer will also conduct a title search and check for outstanding taxes and liens on the property.

STEP 5 – House Hunting

* Create a wish list

House hunting can be a lengthy process. To save yourself time, know exactly what you want in a home beforehand. Think about your immediate needs, future plans and lifestyle. When you look at homes, you may be tempted to concentrate on the home, but don’t forget to

look at the whole property: the lot, the neighbourhood, the surroundings. How close is the home to facilities and services important to you?

* Bring your checksheet

When you’re ready to begin shopping for a home – often called “house hunting” – bring along this House Hunting Checksheet. You may end up seeing multiple homes in one day. This checksheet will help you compare and keep track of the homes you visit. And help you remember the features you did or didn’t like.

STEP 6 – Make the Offer

Your agent presents the offer to the seller. This document includes the price, conditions, deposit and closing date. The seller either accepts, rejects or counters the offer (also called “signing back” the offer).

STEP 7 – Home Inspection or New Home Warranty

Hiring an inspector is voluntary, but it’s a smart idea for resale homes. You can choose to make your offer to purchase the home conditional on the outcome of your inspection. If your inspection reveals major problems, you can negotiate those repairs with the seller before your deal closes, or legally withdraw your offer.

What is a New Home Warranty?

New Home Warranties are typically used when you buy a brand new home. The builder provides a New Home Warranty to cover things like deposits and completion dates, along with labour and materials for at least one year after the home was built. It also protects you against structural problems for a minimum of five years.

STEP 8 – Finalizing the Deal

Finalizing the deal will include the final approval of your mortgage, a meeting with your lawyer to finalize details like insurance and conditions, and the results of a title search.

STEP 9 – Moving Preparations

There’s a lot to do before you move. Line up utilities and other services like phone, cable and internet. If you rent, you must give your landlord notice. Also, forward your mail to your new address and hire a moving company. Preparing these things well in advance will help you make a smooth transition to your new home.

STEP 10 – Closing Day

This is the day you legally get possession of the house. Your lawyer completes the paperwork (so the home is in your name), payments are finalized and you receive the deed and the keys. Congratulations on your new home!

Courtesy of Marc Shendale, Genworth Canada – Vice President Business Development 

Latest statistics indicate that Canadians are currently carrying over $450 BILLION in consumer debt!

Mortgage Brokers are often called in to help refinance someone’s home in order to repay credit card debts. With current low mortgage rates, it certainly is advantageous to pay off high interest unsecured debts in order to lower monthly carrying costs.

Credit as a lifestyle.

If we could describe one of the biggest changes in our society in the last 40 years is our blasé attitude towards the use of credit. Baby boomers as a group have set the pace and trend on a number of development when they became consumers. One of the main one is the use of credit to finance a lifestyle some say would make our pre depression era generation squirm.

Modern society has brought consumerism to a whole new level. Big box stores, island getaways, niche products and services all contribute and fuel a never ending demand.

A lot of these trends are fuelled by easy credit and lenders as well as credit card issuers have stepped up to the plate by offering access to funds to anyone who wants and qualifies for it.

But with “great powers comes great responsibilities” to quote Spiderman’s Uncle Ben!

We teach our kids to read and write but not how to budget.

So it is no surprise that many consumers get caught in the credit card quagmire with often a one way ticket to bankruptcy.

So it is important as a consumer to stop and take a good look at your buying habits and how you use credit.

Ask yourself these questions:

Do you carry balances on numerous cards or just one or two?

Do you know the exact balance owing on your credit card/s without looking at your statement?

Do you only make the minimum payments or try to pay off balances as much as possible?

Do you worry if you will have enough money left over at the end of the month?

Those are some of the questions you should be asking yourself if you haven’t already. For this is the first step to financial control.

If you find yourself in a financial jam you can certainly apply measures to get out of it.

If it is to overwhelming make a point to consult a professional that deals with these situations and can offer credit counseling.

You can start by putting in place measures that won’t put you in financial trouble again. That is where scissors come in handy. Cut up merchant credit cards that charge high interest.

Snip your way to financial freedom and make a point to pay off your full balance at the end of the month. This way you won’t pay any interest.

Make a point to use only one credit card. This allows easier debt management.

Bottom line is this; don’t get caught in the financial roller coaster. You owe it to yourself and your family to set in place financial stability in your household. It is important that you teach your children proper budgeting techniques.

If you lack the knowledge, then this is a great opportunity to educate yourself and acquire a crucial life skill. Contact your local Dominion Lending Centres mortgage professional today!

Courtesy of Danel Girard, AMP – DLC Service First Mortgages 

The fast pace of buying and selling real estate is daunting. Throw in trying to manage closing dates, possession dates and access to the proceeds for the purchase and you have a recipe for disaster.

I recently received an email from a potential client asking these very questions:

“I was wondering how the process usually goes, for looking at a new place. We had planned to use our equity in this home as the down payment for a new place. But if we can’t unlock that equity until the closing date, what usually happens in the interim?  Do we have to find a place to rent?…a month or longer? When we bought this place, it was our first home purchase, so moving to a new one is new to us. I don’t understand how we are supposed to start looking for a place after subject removal (which is 30 days after tomorrow), when we can’t access the equity to make a down payment.”

This scenario happens much more often than one thinks. In order for sellers to access their equity to become buyers they are required to utilize a bridge loan to transition into their “next” home. The bridge loan allows you to purchase a new property before the sale completes on the existing or current residence.

Most lenders have a 45 – 60-day window to exercise this option, with a range of daily rates and admin fees. The four vital components to a mortgage application are income, credit worthiness, the subject property and down payment.

The first three have been approved; now how does one unlock the down payment? Easy. The borrower is required to supply the fully executed purchase and sale contract, subject removal addendum and the current mortgage statement for the existing property. This provides confirmation that you have sold the property on X date as well it confirming the sale price less the possible real estate commission fees and closing costs. Once the current mortgage amount is subtracted the net proceeds are yielded, leaving you your down payment amount.

As mentioned above, there are fees to access bridge financing, as well as a daily interest rate. If the purchase of the next property completes the same day as the sale, then it is handled at the lawyer’s office internally and the funds are transferred accordingly.

The equity is yours to access right now. The lenders verify your equity with the conditions provided.

Here is an example of the timeline and fees of how the bridge loan scenario can be utilized:

Existing home sold, completing December 14, 2016 $600,000

Current outstanding balance $400,000

Equity remaining $200,000

New home purchase, completing November 30, 2016

The lender has approved the down-payment amount. Because the proceeds are still secured against the existing home we had to provide confirmation that the funds were available. We determined there was $200,000 by way of sales contract, subject removal addendum and the current mortgage statement.

The second layer to the bridge loan is the cost of borrowing the $200,000. Bear in mind the funds are still tied up in the existing property. The cost to borrow the $200,000 temporarily is Prime + 2% (daily rate) plus an administration fee of $250.

$200,000 x 4.70% / 365 (days) = $25.76 per day to borrow $200,000

There is a 14-day completion difference. The total cost to utilize a bridge loan is $360.64 (in interest) + $250 (admin fee) = $610.64.

All-in-all this is a very inexpensive and easy way to access the equity you have built up in your current home. Remember, lenders are in business of making money…this is simply a cost of doing business.

Be sure to surround yourself with industry professionals (like the mortgage brokers at Dominion Lending Centres) to make sure nothing is overlooked or miscalculated.

Courtesy of Michael Hallett, AMP – DLC Producers West Financial

Your maximum mortgage amount is determined by your credit profile, your usable income (which is determined by each lender), your down payment among other requirements. Not all applicants fit into one box and this is why you should never trust the “What do I Qualify for Mortgage Calculators”.

Let me tell you a story about Jack and Jill who want to buy a home with city water for their growing family (yes, I have been reading a lot of nursery rhymes lately with my toddlers and have always thought they were a couple).

Jack has a long-term $65,000 per year salaried job with guaranteed pay. Jill is just out of nursing school and has been working as a temporary part-time employee making $25 per hour. They have one child and earn Child Tax Benefit income of $350 per month. They figure because Jill typically works 20 hours a week that they should be able to use all their income of $7,933 per month to qualify.

They decide to check out their bank’s online mortgage qualifying calculator. They are excited as they have $25,000 saved to cover the down payment and closing costs and their bank’s calculator says their “income” is sufficient to buy a $375,000 home.

After getting an accepted offer on a home they head to their bank to get a mortgage. The banker checks their credit, runs some numbers and determines shelter costs (mortgage payment, property taxes and heat) at today’s rates will be $1,993 per month for the property.

It turns out that with Jack and Jill’s credit report results, both with a credit rating of 650 (an average rating but not excellent) that they cannot go over 35% of their usable gross income for shelter expenses. The key words here are “usable income”. The banker then explains that though Jill is now earning income that they would not consider this temporary positions income in calculations until she has at least 2 years from the same employer to show income stability. The bank also does not use Child Tax Benefit income. The 35% of their usable income (Jack’s salary only) works out to $1,895, which is not enough to cover the shelter expenses for the purchase . They do not qualify for the purchase with their bank.

Jack and Jill thought it would be no problem. They are upset and confused so they contact a Mortgage Broker recommended by The Old Woman who just moved out of the shoe. The broker reviews their application and reconfirms that their application doesn’t fit with their current bank (which the broker also works with).

However, the broker has a relationship with many lenders including one that helped the Old Woman move out of the shoe. This lender will uses the Child Tax Benefit income. This means with the brokers connections that their usable income will increase by $350 per month putting them at $2,018 of income allowed to be used towards shelter expenses and above the $1,993 required to buy the home. They have now been approved to buy their dream home and are looking forward to running water.

This is just one example of why the “What can I afford calculators” may give you false results which ultimately could result in disappointment.

Never trust the calculators and always place a subject to financing clause if you make an offer on a home. More importantly consult with a Dominion Lending Centres Mortgage Broker before you start your home search so you know your buying power.

Courtesy of Kathleen Dediluke, AMP – DLC Integrity Mortgage 

Now a days with the amount of information that is shared on the Internet and social media, identity theft and Ponzi schemes are happening regularly. Homeowners are taking the necessary steps to protect one of their largest investments which is their home. However, the last thing you want to worry about is yet another way to lose your hard-earned money.

But as a homeowner, you need to be aware of crimes on the rise known as mortgage fraud and real estate title fraud.

Mortgage fraud

Some borrowers may think that providing false documents and making false statements is not a big deal. However, the Criminal Code clearly states that obtaining funds, including mortgages by providing false information is a crime.

The most common type of mortgage fraud involves a criminal obtaining a property, then increasing its value through a series of sales and resales involving the fraudster and someone working in cooperation with them. A mortgage is then secured for the property based on the inflated price.

Following are some red flags for mortgage fraud:

• Someone offers you money to use your name and credit information to obtain a mortgage.
• You are encouraged to include false information on a mortgage application.
• You are asked to leave signature lines or other important areas of your mortgage application blank.
• The seller or investment advisor discourages you from seeing or inspecting the property you will be purchasing.
• The seller or developer rebates you money on closing, and you don’t disclose this to your lending institution.

Title fraud

When you purchase a home, you purchase the title to the property. Your solicitor registers you as the owner of the property in the provincial land title office.

Title fraud normally starts with identity theft. This occurs when your personal information is collected and used by someone identifying themselves as you. There are several ways criminals can steal your identity without your knowledge which includes:

• Dumpster diving
• Mail box theft
• Phishing
• Computer hacking

Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you are the one hurt by title fraud, rather than the lender, as is often the case with mortgage fraud.

Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft.

Here’s what happens with title fraud: A criminal – using false identification to pose as you – registers forged documents transferring your property to his/her name, then registers a forced discharge of your existing mortgage and gets a new mortgage against your property. Then the fraudster makes off with the new home loan money without making mortgage payments. The bank thinks you are the one defaulting – and your economic downfall begins.

The following are ways you can protect yourself from title fraud:

• Ensure you keep personal information confidential when on the internet or phone until you know who are dealing with, how it will be used and if it will be shared with anyone.
• Only carry minimal information and identification in your wallet, don’t have your social insurance card with you.
• Check your credit report regularly. You can get them free when you request them from the Equifax and Transunion when they mail them to your home. If you notice anything suspicious, contact the credit bureau right away.
• Check your financial, bank and credit card statements regularly for any inconsistencies and unknown charges.
• Consider obtaining a title insurance policy, as title insurance protects against many title risks associated with real estate transactions.
• Check your mailbox for mail on regularly, if not every day.
• Shred and destroy any financial and personal identification documents, as well as any unsolicited credit card applications rather than just simply throwing them away.
• If you don’t receive your bills or other mail, follow up with your creditors.
• If you receive credit cards that you didn’t apply for or if you did apply for them and didn’t receive them.
• Contact your mortgage lender first if you are having difficulty making your mortgage payments.

The following are ways to protect yourself from title fraud when purchasing or refinancing a home:

• Make sure you work with a licensed real estate agent and is familiar with the area you are interested in buying. Select to work with someone that can provide trusted referrals and check on them.
• Check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable.
• Always view the property you are purchasing in person, don’t buy without seeing it first.
• Beware of a real estate agent or mortgage broker who has a financial interest in the transaction.
• Ask for a copy of the land title or go to a registry office and request a historical title search.
• In the offer to purchase, include the option to have the property inspected and appraised.
• When giving a deposit when purchasing a property ensure the funds will be held “in trust” with a solicitor or a real estate agency and not directly with the seller.
• Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab.
• Ask to see receipts and permits for recent renovations.
• Consider the purchase of title insurance.
• Review and make sure you are comfortable with the terms and conditions with the mortgage commitment letter or approval.
• Review the “cost of borrowing disclosure statement” and be aware of any additional fees or charges. Ask questions if you are not sure.
• Know and understand what you are signing. If you have questions, ask. If you are not comfortable or something is not right, do not sign the documents.
• You might want to consider using your own solicitor for legal advice if you are asked to use the same lawyer as the seller.

“Straw buyer” scheme

Another term for mortgage fraud is the “straw” or “dummy” homebuyer scheme. For instance, a renter does not have a good credit rating or is self-employed and cannot get a mortgage, or doesn’t have a sufficient down payment, so he or she cannot purchase a home. He/she or an associate approaches someone else with solid credit. This person is offered a sum of money (can be as much as $10,000) to go through the motions of buying a property on the other person’s behalf – acting as a straw buyer. The person with good credit lends their name and credit rating to the person who cannot be approved for a mortgage for his or her purchase of a home.

Other types of criminal activity often dovetail with mortgage fraud or title fraud. For example, people who run “grow ops” or meth labs may use these forms of fraud to “purchase” their properties.

It’s important to remember that if something doesn’t seem right, it usually isn’t – always follow your instincts when it comes to red flags during the home buying and mortgage processes. Get in touch with your local Dominion Lending Centres mortgage professional to learn more.

Courtesy of Alisa Aragon, AMP – DLC Canadian Mountain View 

As the dust is settling on the major changes to the mortgage qualifying rate and it is back to work as usual, some Canadians are starting to realize that there were some other significant changes that affect us all.

Starting this year you must now declare which property is your principal residence. There will be a form with your tax return that you must fill out. The purpose of this of course to make sure that the house flippers of the world pay their fair share of income tax on monies earned by buying and selling homes. This will also affect foreign owners, when they sell property in Canada, even though a family member may have lived in it they will now pay capital gains. They are closing some rather large loopholes in the system where many people have taken unfair advantage.

Another point that was probably missed by most is that if you have a home with a legal suite, when you sell the home you will have to pay capital gains on the portion that is rental. Many of these suites collect rent that is never reported to CRA and people avoid taxes by just pocketing the money. For many years now if you collected rent but didn’t report it on your taxes then you were not allowed to use it as income to apply for a mortgage.

This may also open up another legal/accounting question for parents that co-sign on their children’s mortgages. In Alberta at least when you co-sign you are usually on the mortgage and on title. Will it mean that when that home is sold will there be legal and tax ramifications when the home is sold.

Lots of unanswered questions on that subject that you will need to consult your accountant and your Dominion Lending Centres mortgage professional about before proceeding.

Courtesy of Len Lane, AMP – DLC Brokers for Life