Annual reality check for your mortgage

Most of us tend to think of our mortgage as the ultimate “buy and hold” purchase. After all, who wants to spend any more time in the “borrower” chair than is absolutely necessary? You get a 5-year term, and then go on automatic pilot until it comes due again. You might wring your hands over your other finances, but your mortgage is set in stone, right?
Well, not exactly. In fact, it’s a great idea to have an annual mortgage review to see if it’s really working for you – especially in the context of the rest of your financial picture.  After all, a lot can happen in a year – especially during our “mortgage years”, when we tend to be juggling many commitments in our busy lives! Think of all the financial commitments we carry during these years: care of our children, tuition or school expenses, one or more cars, vacations, home renovations, travel… the list seems to go on and on.
Chances are that something in your financial life has changed since you took out your mortgage. Life doesn’t stand still, after all. The mortgage planners at Mortgage Architects – an elite firm of Canadian mortgage brokers – have identified a list of the most common reasons why a mortgage may need some adjustment:
•    You’re considering a move to a new home in the next year or two;
•    You wonder if you can tap into some of your equity for a special renovation project to upgrade your home;
•    You’re wondering if you can afford a vacation property;
•    You’re considering the benefits of investment property ownership;
•    You’re a bit concerned about a large expense looming in your future:  like university tuition, a wedding, a leave from work, a new career or business, a big vacation or a new vehicle, for example;
•    You’re making more money – or less money – than you were when you began your mortgage;
•    You’re carrying some credit card or other high-interest debt that is eating away at your monthly cashflow;
•    You’re worried that you’re not saving enough for your retirement years, and you’ve heard there’s a way to convert your non-deductible mortgage debt into deductible investment loans using a re-advanceable mortgage.  You’re interested in collecting annual tax refunds, paying off your mortgage faster, and having an investment portfolio for the future.
If any of these sound familiar to you – and if you have held your mortgage for a year or more – then it’s worthwhile to contact a qualified mortgage planner to give your mortgage a reality check.
At Mortgage Architects, the company’s mortgage planners provide this service free of charge and with no obligation.  They tailor each mortgage to their client’s current needs and long-term goals, with an overall focus on mortgage planning, Mortgage Planners believe that a mortgage is not just a single transaction done in isolation of your goals and overall financial situation, but that a mortgage can accomplish so much more when property structured and integrated into your overall financial plan.
Mortgage Planners look at the mortgage as a financial keystone - the right mortgage can build your wealth, protect you from a financial downturn, and save you thousands of dollars. That’s why an annual mortgage review is part of their overall service offering.  It’s also a smart financial move for Canadian homeowners. 

This article is brought to you by Steven Porter, Mortgage Agent/Planner of Mortgage Architects Inc., steven.porter@mtgarc.ca, 1-905-875-2582

7 ways your home can make money for you.

Who knew you could be living in a money-maker?

The roof over your head is likely the biggest asset you'll ever own. Trouble is you don't see any money from your house until you sell it – unless you follow the lead of some ingenious homeowners who have figured out a way to cash in on their homes while still living in it. You could be sitting on a pile of dough without even realizing them. Here's how you can make your home make money.

1. Become a landlord
The plan: Rent an apartment in your home. It could be a basement bachelor, a renovated attic, an entire floor or a detached, renovated garage. Renting an apartment can allow you to buy a house you might otherwise not be able to afford. "It also allows many seniors to hang on to their homes," says Susan Wankiewicz, executive director of the Landlord's Self-Help Centre, a nonprofit service that helps small-scale landlords in Ontario.

KA-ching!: Rents range from a few hundred dollars to more than $1,000 a month. When Rosalind Stefanac and her husband bought their first home in Toronto in 2002 for $300,000, they specifically looked for a property with an apartment that would help ease the mortgage payments. They rented out their basement apartment for $700 a month, which covered half the mortgage.

Reality check: It takes more than paint and wallpaper to make an apartment suitable to rent. Each municipality in Canada has individual standards regarding renting, and you'll need to ensure the space meets zoning codes. Stefanac spent about $10,000 on drywall, insulation, carpets, wiring and a new fridge – and it took 14 months of rent money to recoup the cost.

Being a landlord can also be stressful, especially when your tenant gets behind on the rent. After Stefanac's first tenant lost his job, he couldn't always make the rent and sometimes paid her partially with five- and 10-dollar bills. Carefully screen potential tenants by getting references, especially from previous landlords.

2. Put up a parking lot
The plan: Rent out your driveway or garage to people who need parking space (usually in major urban centres) or storage facilities for items that need to be kept indoors over winter, such as boats and motorcycles. Free classified ad websites such as www.craigslist.org and www.kijiji.ca have categories specifically devoted to parking and storage spaces for rent.

KA-ching!: Norm Gill, a retired school district employee whose Vancouver home is close to B.C. Children's Hospital (where parking spots go for $10 a day), rents out two spaces in his four-car garage for a total of $300 a month. "We built a new home and didn't realize how much it would cost, so this brings in a little extra money," he says. Rebecca Gruihn, a film student at York University in Toronto, rents out the parking space that comes with her apartment for $75 a month. "It's not a lot of money, but when you're a student, every bit helps," she says.


Make your property a star
The plan: Rent out your home as a set for a commercial, TV movie or feature film. Every province in Canada has a government-run film development corporation (British Columbia Film, for example) that lists properties available to location scouts and producers. All you need to do to get listed is send in photos of your home.

KA-ching!: Rental rates can vary from $500 to $5,000 a day, depending on the type of project (a feature film typically pays more than a TV production). When the Honourable Myra Freeman, lieutenant-governor of Nova Scotia, listed her Halifax home for sale in 2000, a location scout who went to the open house decided the 1970s details – yellow appliances, shag carpet and wallpapered rooms – were just right for the feature film Scotland, Pa., directed by Billy Morrissette and starring Christopher Walken. Freeman was pleased by the respect the film company showed for the property during the three-week-long shoot and says seeing a movie made in her home was an "exciting adventure." Over the past two years, Susan Harding-Cruz of Hamilton has earned $5,000 for renting out her home for three TV productions that each took three days to shoot.

Reality check: A movie shoot can upend your life, since you'll have to move out of your home during filming. You may have a crew of 50 people tramping through your house, so things can get broken. "This isn't for someone who is uptight about her home," says Harding-Cruz. "If you've got lots of precious things around, it might make you nervous." Check that the production company has adequate insurance to cover replacement costs. When one of Freeman's antique tables was badly scratched, the film company paid for a replacement.

4. Host a student
The plan: Host an international student in your home by providing a separate bedroom and three meals a day. Homestays, as they are called, can last anywhere from a few days to a year, and students can range in age from 10 to 60. The host family is expected to spend quality time with the student, helping him adjust to a new culture and often a new language.

KA-ching!: You can earn about $500 to $800 a month per student and can host more than one student, says Robin Wilson, managing director of Canada Homestay International, which has a network of 4,000 homeowners across the country. Laura Williams, a Vancouver-area energy manager and single mom to three teens, hosted a 16-year-old Brazilian boy and received $800 a month. "It was a positive experience for my kids," says Williams. "They loved getting to know Felipe and treated him just like a brother. And they are hatching plans to go visit him in Brazil now that he is back home."

Reality check: You, the homeowner, lose some privacy, and students may test their newfound freedom since they are away from their families, often for the first time. Felipe had trouble sticking to a curfew because he hadn't had one back home.

5. Run a bed-and-breakfast
The plan: Offer one or more rooms in your home to travellers who are visiting your area.

KA-ching!: Rates vary widely, from about $50 to $200 a night, depending on how luxurious the accomodations are and where you are located. Debbie Gaspich purchased her 150-year-old home, the Martin House Bed and Breakfast, in Jordan Village, Ont., (close to Niagara-on-the-Lake and the popular Shaw Festival) with the intention of continuing to rent out the rooms to pay for the renovation and upkeep of her large property. She began by renting just a couple of rooms and earned $7,000 in her first year. Today she rents five bedrooms, as well as a small cottage on the property, from May to October and earns $25,000 annually. She manages the B&B on top of a full-time job.

Reality check: Changing sheets. Preparing brunch. Keeping your home tidy. Engaging in small talk early in the morning even if you don't feel up to it. Running a B and B can require a lot of work and energy.

6. Go back to the land
The plan: If you own a large parcel of land in a rural area, you can rent it to farmers to raise crops or livestock.

KA-ching!: Depending on where you live and what the land is used for, rates can vary from $20 to $200 an acre, says Kevin Hursh, an agriculture consultant in Saskatoon. "There are different values for different crops – you can earn more if you rent your land to harvest soybeans instead of wheat or barley, for example." Six years ago, Tami and Daniel Blais sold their house in town and moved to a $130,000 country home that came with 160 acres outside Battleford, Sask. Instead of farming the land themselves, they rent 80 acres to a local farmer. The farmer keeps two-thirds of the profits and pays the other third (about $3,000 a year) to the Blaises as rent. "We use the money to pay our property taxes and insurance," says Tami.

Reality check: The odour of manure in the fields and the noise of combines swathing the crops may be a bit of a nuisance, but for most people in rural areas this is just part of country living. More concerning is the potential for pesticide drift when crops are sprayed. Also cattle or horses may get out and require rounding up.

7. Tap into your equity
The plan: Apply for a home equity loan. One-quarter of Canadian homeowners have borrowed against the equity in their home, according to a recent Ipsos-Reid survey. These loans are easy to qualify for and have lower interest rates than other types of loans (usually around prime). Plus, banks typically require that you pay only the interest expense of the loan.

KA-ching!: This is an easy way to get access to a lot of money without having to wait too long. "Many banks will lend you up to 80 per cent of the value of your home, 85% with some private lenders, minus any outstanding mortgage".

Reality check: Because they are so easy to acquire, you can land in more debt than you can handle. If the market turns downward and your $300,000 house is suddenly worth only $250,000, you've lost a lot of the equity in your home and still have the loan to repay.
by Anne Bokma

Posted by Steven Porter. Steven is a licensed Mortgage Agent with Mortgage Architects and a retired licensed, real estate broker with 30 years experience in residential real estate. He can be reached at 1-905-875-2582; steven.porter@mtgarc.ca or online at 1800Mortgages.ca

Court rules against landlords access to photograph property

A panel of three Ontario Divisional Court Judges have held that residential landlords are not permitted to photograph a property while it is occupied by a tenant unless the lease explicitly permits such photographs to be taken, or the landlord obtains the express consent of the tenant.

The Ontario Landlord and Tenant Board ordered a tenant to be evicted when she refused to allow the landlord access to the property for the purpose of photographing it so that it could be listed for sale. The tenant refused on the basis that her privacy would be invaded if photographs of her and her children’s personal possessions would be disseminated to the public via the Internet to advance the sale of the property.

The Landlord and Tenant Board held, erroneously, that the lease in question provided the landlord with entry “in any circumstances” and that the landlord was therefore permitted to enter and take pictures. On appeal, the Divisional Court judges noted that the lease did not contain any such provision. 

The Divisional Court reviewed the relevant sections of the Residential Tenancies Act, 2006 that pertain to a landlord’s right to enter the rental premises and found that none of the statutory provisions permitted entry for the purpose of taking photographs to market the property for sale or lease.

Sections 26 and 27 of the Residential Tenancies Act, 2006 provide that a landlord may enter a rental unit for, among other reasons:

1. in cases of emergency;
2. to clean the unit if the lease requires the landlord to do so;
3. to show the unit to prospective tenants (if notice has been given to end the tenancy);
4. to carry out a repair, replacement or to do work;
5. to allow a potential mortgagee or insurer to view the property; and
6. to carry out an inspection of the unit.

A landlord is also permitted to enter a property if they have the consent of the tenant or “for any other reasonable reason for entry specified in the tenancy agreement.”

The Divisional Court noted that the lease in question allowed the landlord to enter on notice “for showing the premises to prospective tenants or purchasers,” but also pointed out that “there is no clause permitted entry by an agent to take photographs in furtherance of a sale.”

The Divisional Court held that the landlord had no right to enter to take photographs without the tenant’s consent (although they could take measurements) and overturned the eviction order that was made on the basis of the tenant’s refusal to allow entry.

Interestingly, the Divisional Court distinguished the current case from a past case where a landlord took photographs of a property in connection with a damage inspection. In that case, the photographs were permitted due to the fact that they were taken in connection with an inspection, which is expressly allowed by the legislation and presumably also due to the fact that the photographs would not impact the tenant’s privacy rights given that they would not be published on the Internet.

This recent decision is another reminder of how a little forethought when drafting a lease can avoid complications down the road. By 

Matt Maurer, REM Oline

'Tenanting' a vital skill for landlords

'Tenanting' a vital skill for landlords

by finance columnist Ellen Roseman

Real estate can yield good returns for investors. But success requires more than just a talent for buying low and selling high. You also need an ability to size up potential tenants, to decide if they will treat your property kindly and pay consistently. Experienced landlords say this is the hardest job of all — and requires skills that take a while to develop.

"I have three properties in Moore Park in Toronto," says Eamon Hoey, "and I've learned a lot in the five years since I've been in the rental market. After-tax returns on my properties, including any capital gains, are about 5.2 per cent a year. Most income funds will give you a better return," he says.

"Expect disasters", says Hoey. "The furnace in one property stopped working and caused $105,000 worth of damage. Unfortunately, the insurance didn't cover the damage" — since the home wasn't occupied by tenants at the time.

He makes it a rule not to rent to people with pets. His sister once had a tenant with a pet snake, which escaped and was spotted by another tenant.

"My sister got a major bill from the fire department and the exterminator, who had to search for and destroy the boa constrictor. This isn't an event my sister likes to talk about publicly."

Kathy Paliwoda is a consultant for residential landlords in Southwestern Ontario. She also teaches realtors about a landlord's rights and obligations. She says, one of the biggest causes of disputes between landlords and tenants is overpayment of utility bills. What happens if a tenant agrees to pay the bills for water, gas and electricity and later falls behind? Is the landlord liable? Can the utility put a lien on the property?

In a recent Ontario court case, Duong vs. Waterloo North, Justice Donald Gordon ruled landlords weren't responsible for a tenants' unpaid hydro bills.

Paliwoda says landlords may still be on the hook. Utilities often ask them to sign a contract, saying they're responsible when tenants don't pay utility bills on time. Her advice: If a utility threatens to shut off the power, pay the bills and sue in small claims court. Otherwise, you could have thousands of dollars in property damage that insurance won't cover.

Libby Telford is a first-time landlord. She says, "I think students are the best choice. They're not around much, they respect the rules of the house and they have provided me with post-dated cheques for the term of their lease."

However, she's not looking forward to finding tenants again. "I'm very picky and it's stressful for me, knowing I would consider only one out of every six prospective tenants."

Andrew Vitch is an experienced landlord. He owns seven rental properties with 31 units in St. Catharines, Ont. The worst tenants, he says, are those who bring in friends to sublet their places when they leave. "Invariably, these tenants are not as good as the ones we chose," he says. "When they eventually move, we're faced with significant cleaning and repair costs that probably wouldn't have occurred with the original tenant."

Vitch and his wife Sue do regular maintenance in their buildings. They deliver cards and candies to tenants at Christmas. "I believe the bottom line in selecting tenants is: Are they on the way up or the way down?" he says. "We've rented to several tenants who had recently been bankrupt. After thorough investigation, it became obvious they had bottomed out and were getting things back together."

He talks about "tenanting" as a learned skill. As you get better at screening, checking references, calling banks and employers and running credit checks, you tend to be more satisfied with your tenants — and your real estate investment.








Posted by Steven Porter, Real Estate Broker / Mortgage Advisor

How to Weed Out Problem Tenants

The last thing a landlord wants to do is rent to the wrong tenant. So for property managers who are taking care of the leasing details, they are the first line of defense in keeping problem tenants out of the building. Landlords are leaning on these property managers and expecting them to find renters who aren’t going to damage the property, be late with rent payments, or take the landlords to court.

So how do you ensure your tenants are the right ones? Global real estate network Lamudi offers five tips for selecting a good tenant.

1. Meet the applicants. This is about preventing problems before they start. The rapport you have with tenants will be crucial in enduring their happiness living in a property. Schedule face-to-face meetings with applicants to get a better sense of who they will be as tenants and how you can work with them. If you can’t meet face-to-face, schedule a phone call instead.
2. Be thorough with documentation. Keep a copy of tenants’ identity cards or passports, and require proof of income before administering a lease agreement. Ask for an employee contract as well as copies of their most recent pay-stubs. If you need extra confirmation of a tenant’s ability to pay, ask for them to provide previous landlords as references.
3. Check their credit history. This might seem like something more for a home buyer than a renter, but landlords/property managers should always check a tenant’s credit history. This will tell you how much outstanding debt they have, as well as whether they have a history of paying their bills on time. Even if they can afford the rent on their salary, other repayment obligations may affect their budget.
4. Look out for warning signs. Pay attention to a prospective tenant’s rental history. If they’ve moved around a lot, that could indicate issues between the tenant and their past landlords. Most landlords will want a tenant who can commit to staying for a longer period of time.
5. Listen to your instincts. Even if all the information and documentation a renter provided checks out, there may still be something holding you back from offering them a rental contract. If you feel uncomfortable renting to someone, listen to your gut — even if they look good on paper.

—REALTOR® Magazine

How can mortgage prepayment charges be avoided?

 

You have a number of options available to prepay your mortgage and avoid prepayment charges:

Portability

If you’re selling and buying a new home, your mortgage may have a portability option that allows you to Port your existing mortgage term, outstanding principal balance and maturity date to a new property.

Assumption

If you’re selling your home, the purchaser may have the option of applying to assume your mortgage with the existing terms and conditions on closing.

Open mortgage

Enjoy the flexibility to pay off as much of your mortgage any time without paying a prepayment charge.

Subject to approval and eligibility based the terms of the mortgage.

Contact me to learn more about assuming someone else's CIBC mortgage, or having a potential purchaser assume your CIBC mortgage.

There are also ways to save thousands of dollars in interest payments breaking your mortgage early, paying the discharge penalty, and not being "out of pocket" for the expense.

Steven Porter, Mortgage Advisor - CIBC, 1-888-885-8962, steven@stevenporter.ca

Today's Most Desirable Home Features

Housing trends and styles are changing constantly. Today, more than ever, buyers have a strong sense of what they want in a home. 

Today’s desirable home features depend greatly on the type of buyer.  Buyers can be divided into two main groups. The first group are first-time buyers which is pretty self-explanatory. The second group are the move up buyers, which are looking to move into a home that addresses the shortcomings of their existing home. They aren't necessarily second-time buyers but they are often people that have out grown their current home. Buyer age is also a main factor in deciding the desired home features.

This article focuses on what is hot in the housing market today. Whether you are planning on renovating, selling, or you are looking for a new home, this information will help you make choices that will contribute to both your real estate enjoyment and investment.

Home Exterior

Today, stone and stucco are very popular choices. Brick is the standard material used with mass builders, but the more customized and trendy homebuilders are using stone and stucco on a more frequent basis.

Floor Layout   

Bungalows are hot nowadays. Excessive floor level changes are no longer popular as people desire to live on one or two levels.

Room Sizes

Room sizes have been gradually increasing for a number of years. Buyers tend to place the most importance on three key rooms: the kitchen, family room and master bedroom. You can expect to see these three rooms continue to increase in size over the next 10 years while rooms such as the living and dining room are likely to get smaller or disappear altogether. Many new homes scrap the living room and instead incorporate that space into the family room or the 'Great' room.

Buyers still, ideally, desire four bedrooms in their home and would like, if possible, two living areas. One of the living areas can be the recreation room in the lower level (basement).
A master bedroom on the main floor is ranked very important for buyers 65 and older. A two-car garage with ample storage area and a main floor laundry area is desirable for move-up buyers.

Kitchen and Bathrooms 

The kitchen is becoming the hub of the house. The most desired features for the kitchen include: an abundance of counter space, a butler’s pantry, deep drawers and two sinks. Stainless steel appliances are also very popular today, and in the upper end market, appliances concealed as cabinetry are very chic.

Large kitchens with an island and counter tops made of granite or marble are very desirable for move up buyers. However, this must be matched with stylish kitchen cabinets.

Luxurious bathrooms with a separate tub and multiple shower heads; pedestal sinks and large mirrors; an overall spa like feeling; attached dressing rooms and a place to sit are all desirable features. Master suite soaker tubs and whirlpools are still desirable for many home buyers, but not as important as other features.

Energy Efficiency 

With the green movement becoming more popular, energy efficient appliances, high-efficiency insulation, eco-friendly treatments, and environmentally smart building plans are among the "green" features touted in homes.

Tech-readiness 

Satellite and internet wired along with multiple phone jacks are what people want in today’s technology world. With today’s busy lifestyles relaying heavily on technology, even a day or two without high speed internet could be a major inconvenience.

Home Office 

Today, many people would much rather have home office space than a formal dining room. Many employers are seeing the business advantages of allowing employees to work from home. As well, many people are using work from home opportunities to help supplement income because of work shortage or as an opportunity to make money online.

Outdoor Living Space 

The popularity of outdoor spaces continues to grow. Patios, deck, exterior lights, fenced yard and fire pit extend the outdoor living space at home and make a great extra feature.

Other Notables

Some other notable features that home buyers consider very important when buying a home include central air conditioning, recessed lighting, hardwood flooring, energy efficiency and the potential to turn a profit should they decide to sell their home in the near future.

Today’s buyers are looking for a little luxury and features and treatments that are the highest quality their price range will permit.

Copyright 2014 Canada Realty News
Posted by, Steven Porter, Mortgage Advisor - steven@stevenporter.ca

Lenders forcing investors to move into commercial

 More landlords are selling up their single-family homes to get over the increasing obstacles imposed by lenders, according to investors.

Frustrated by the increasing demands for additional paperwork and lengthy waiting periods, more investors are selling their assets to make the move into commercial.

“Investors realised more the advantages of commercial investing over residential after the market tumbled and with more lending restrictions in place, we are seeing a lot more make that move,” says Chris Davies, a real estate investor and Realtor in Edmonton.
Requiring a larger down payment, Davies says more investors are willing to sell up their assets quickly and make the move, both into multi-family buildings as well as retail and office space.

Speaking to CREW for a special feature on commercial investing in the new September issue, Simmone Park, an Ottawa-based investor, says landlords can be more financially “creative” to make the move.

“You can get creative and use a small business loan in your corporation’s name rather than use a conventional mortgage,” she says.

The positive performance of commercial real estate across the country is also whetting investor appetite to make the move from residential. According to the latest REALpac/IPD Canada Quarterly Property Index, Calgary recorded the best return of 11.1 per cent for the year ending June 30 compared to the Canadian average of 9.5 per cent.

Edmonton enjoyed returns of 10.8 per cent during the same period, while Toronto hit the spot at 10.1 per cent.

Written by  Grainne Burns

Blogged by Steven Porter, Mortgage Advisor,