fbpx

HOMEPORTAL

Menu

Blogs

How can homeowners safeguard against title fraud?

Blogs / / / , , , ,

How can homeowners safeguard against title fraud? There are new reports of title fraud every week, and more and more people are wondering what they can do to safeguard their properties against becoming the next target. In an interview with CBC‘s Ismaila Alfa, FCT President Daniela DeTommaso discussed the matter. “We’re witnessing a degree of complexity in these frauds we’ve never seen before,” says Daniela. “[Fraudsters are] using fake IDs, but to the naked eye, you wouldn’t know they weren’t who they said they were.” Homebuyers and current homeowners alike are vulnerable to title fraud. When a person’s property title is stolen or they buy a home that was falsely listed, they have few legal choices. Seeing “innocent people on both sides [of transactions] just heartbroken by something they could never have even dreamt could happen,” is how Daniela describes the situation. Professionals in the field strongly recommend that homebuyers invest in title insurance. Title insurance is the “greatest security” for homebuyers, according to Tim Hudak, CEO of the Ontario Real Estate Association (OREA). Protections against title fraud for current homeowners Even years after closing, homeowners can purchase title insurance to protect their financial investment in their home. However, it may be too late to offer protection once a problem like fraud has been uncovered. According to Daniel, now is the time to buy title insurance. Just like you wouldn’t buy a house without property and casualty insurance. She further says, “there’s no reason you shouldn’t be getting title insurance.” A title insurance policy offers more than financial protection to a homeowner who discovers the theft of their property’s title. Daniela argues that the title insurance company must likewise defend the policyholder. That implies they will step in and defend the insured as soon as they realize title fraud has occurred. Costs are entirely covered by them. Legal fees to clear a home’s title can run into the tens of thousands, and there are further expenses associated with uncovering the fraud and managing the legal proceedings. It’s not just making up for that huge loss,” Daniela says. As an added bonus, you won’t have to worry about the time or money it takes to confirm your identity because someone else will do all of it for you. Don’t put off getting homeowners insurance until your house is a news story. Existing FCT homeowner’s title insurance protects you and your property from potential risks. Related posts 30 January 2023 How can homeowners safeguard against title fraud? How can homeowners safeguard against title fraud? There are new reports of title fraud every week, and… 30 January 2023 Bank of Canada will increase rates, and leave room for more: BMO Bank of Canada will increase rates, and leave room for more: BMO One possible reason why we won’t… 28 January 2023 How To File A Warranty Claim And What You Can Anticipate How To File A Warranty Claim And What You Can Anticipate There has been a recent surge in the population… 28 January 2023 Three Improved Ways to Understand Your Warranty Three Improved Ways to Understand Your Warranty Purchasing a home in the pre-construction phase can be… 28 January 2023 Can I Have A New Home Warranty Even If It’s Not New? Can I Have A New Home Warranty Even If It’s Not New? Did you buy a previously owned house recently?… 26 January 2023 Process of warranty claim and what to expect? Process of warranty claim and what to expect? Everything about your new house would be wonderful if you… 25 January 2023 Home Snow Removal? Remember These Spots Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a…

How can homeowners safeguard against title fraud? Read More »

Bank of Canada will increase rates, and leave room for more: BMO

Blogs / / / , , , , , ,

Bank of Canada will increase rates, and leave room for more: BMO One possible reason why we won’t see a rate cut this year is that Canadian markets have already started talking about them. Over the weekend, BMO Capital Markets sent a letter to investors stating their anticipation of a rate increase this week. Currently, they predict a pause in rate hikes by the Bank of Canada (BoC) following the upcoming one, but they caution that this may not be the BoC’s limit. Hikes in the future could be fueled by bullish fundamentals, inflationary concerns, and market anticipation. The Bank of Canada Is Likely To Raise Interest Rates Next Week It is widely anticipated that the Bank of Canada will increase its overnight rate this week, marking its entry into the supposedly restrictive terrain it has previously addressed. According to BMO, the overnight rate will increase by 25 basis points (bps), making it equal to its 20-year high. There is anticipation that this will be the highest point for the year, but they caution that further increases cannot be ruled out. The BMO rate and macro strategist Benjamin Reitzes argues that with inflation still far above target, we predict that Governor Macklem and the Governing Council will keep the door open to further increases just in case the data forces their hand. He said the BoC may surprise the market by cutting rates before the fall, when cuts are widely expected. There’s reason to think there might be even more hikes down the road Canada’s Base Is Solid, and It May Not Need To Ease There is much speculation of a recession, yet there are few indicators of a downturn in Canada’s fundamentals. The preferred gauge of inflation used by the BoC, core CPI, is still above 5% and much above the 2% target rate. December’s employment report showed another near record growth, indicating that the economy is still humming along strongly. The Bank of Canada’s Business Outlook Survey from last week was a major shortcoming. Its data demonstrated a decline in morale, although companies maintained an optimistic outlook. Despite the slowdown, Reitzes argues that it is intentional on the part of the BoC. They’re attempting to reduce inflation by cooling the economy. More dangerous than credit shortages is the possibility of an inflationary spiral. Moreover, BMO suggests the BoC may raise rates for risk management reasons. They would rather keep inflation under control than have it spin out of control if they are overly permissive. The latter is a more serious issue that requires a more dramatic cooling event to mitigate. In this situation, it’s preferable to err on the side of caution than carelessness. While there has been some good inflation news as of late, that doesn’t mean the trend will continue. Upside inflation risks still exist, but they have diminished since he made those comments a few months ago. Due to market anticipation of a reduction, the BoC may be compelled to raise rates Since the market is already factoring in planned layoffs by this fall, it’s time to start a fresh funding round, right? For precisely this reason, the BoC may be unable to decrease interest rates. A resurgence in economic activity may be possible before it completely dies down if expectations shift in a lenient direction. According to Reitzes, this could lead to even higher inflation before the desired effect is seen. “While the BoC isn’t excessively busy with the market, improved financial conditions go counter to the purpose of lowering inflation pressure, and cannot be a positive development,” he argues. BMO believes that a 25 bps raise is warranted on the basis of fundamentals, risk management, and market conditions. Although, as Reitzes points out, the BoC often attempts to surprise. This keeps a central bank relevant by discouraging individuals from taking actions that run counter to its current objective. That’s why, he advises, we shouldn’t rule out pausing the meeting this week. They still want to go on future excursions, despite this setback. In particular if core inflation proves to be more persistent than expected. Related posts 30 January 2023 Bank of Canada will increase rates, and leave room for more: BMO Bank of Canada will increase rates, and leave room for more: BMO One possible reason why we won’t… 28 January 2023 How To File A Warranty Claim And What You Can Anticipate How To File A Warranty Claim And What You Can Anticipate There has been a recent surge in the population… 28 January 2023 Three Improved Ways to Understand Your Warranty Three Improved Ways to Understand Your Warranty Purchasing a home in the pre-construction phase can be… 28 January 2023 Can I Have A New Home Warranty Even If It’s Not New? Can I Have A New Home Warranty Even If It’s Not New? Did you buy a previously owned house recently?… 26 January 2023 Process of warranty claim and what to expect? Process of warranty claim and what to expect? Everything about your new house would be wonderful if you… 25 January 2023 Home Snow Removal? Remember These Spots Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a… 23 January 2023 Lower Bond Yields Mean Lower Fixed Mortgage Rates Lower Bond Yields Mean Lower Fixed Mortgage Rates Mortgage debtors may finally see some relief after…

Bank of Canada will increase rates, and leave room for more: BMO Read More »

How To File A Warranty Claim And What You Can Anticipate

Blogs / / / , , , , , , , ,

How To File A Warranty Claim And What You Can Anticipate There has been a recent surge in the population of small towns in Ontario’s rural areas. More and more people migrate there from the city’s crowded core. The pandemic has helped to speed up this migration, as telecommuting has already proven to be an effective business tactic. So, here’s some good news if you’re a “remote” worker in search of a brand-new house in a less crowded area. To start, you have a variety of options to consider. Numerous new residences are being built in little villages away from major cities. Second, your builder is almost certainly going to include a Tarion-backed warranty in the sale price of your home. This is a summary of what you should expect from warranty claim: Your deposited money is secure Your deposit on a new freehold house or condominium unit in Ontario is secured when you sign a cheque for the full purchase price. The amount of your security deposit returned to you when you sell a freehold property is directly related to how much money the property sells for. If the property is selling for less than $600,000, your deposit is fully covered up to $60,000. If the price is higher, your deposit is protected at a rate of 10 percent, up to a maximum of $100,000. The concept of security deposits in condominiums is slightly different. Your security deposit is held in trust in accordance with the Condominium Act and will be completely safe. The new home warranty plan provides you with an additional $20,000 in coverage. Compensation for delays is possible In either case, you and the builder would prefer that the closing date not be pushed back. However, delays sometimes occur for good reason. If your builder follows the proper processes, they may be able to delay your completion or occupancy date. This is done according to the provisions of your purchase agreement. However, if they don’t, you could be eligible for compensation for the delay. The maximum amount that can be claimed under the warranty is $7,500, with daily compensation set at $150. This sum is meant to assist with any unforeseen costs, such as higher rent or food, that may arise as a result of the hold up. You can file a claim for delay compensation to help pay the costs of things like short-term housing rentals and storage facilities. Defects can be covered by warranty for up to seven years Upon moving into your new residence or assuming occupation of your new condo, the duration of this guarantee will begin. There are three distinct phases of protection. All violations of the Ontario Building Code (OBC) and unlawful substitutions of goods your builder agreed to deliver are covered in addition to any flaws in workmanship or materials in the first year. If your bathroom exhausts into the attic, for instance, you are breaking the OBC. Unauthorized substitutions include situations like when a builder installs cheaper materials like laminate countertops when you specifically requested granite. The builder could be contacted for a warranty claim in any scenario. Your two-year warranty protects you from problems. These include your home’s plumbing, heating, air conditioning, and electrical systems. Moreover, it includes OBC’s health and safety violations, cladding faults, and water seepage in the basement or elsewhere. The third type of protection is up to seven years of security against significant structural faults. Any problem that compromises the safety of the building’s structure or restricts the functionality of a sizable component of the dwelling is considered a substantial structural issue. Possible causes include foundation movement, severe cracking of basement walls, and the growth of deadly mould. Related posts 28 January 2023 How To File A Warranty Claim And What You Can Anticipate 28 January 2023 Three Improved Ways to Understand Your Warranty Three Improved Ways to Understand Your Warranty Purchasing a home in the pre-construction phase can be… 28 January 2023 Can I Have A New Home Warranty Even If It’s Not New? Can I Have A New Home Warranty Even If It’s Not New? Did you buy a previously owned house recently?… 27 January 2023 How To File A Warranty Claim And What You Can Anticipate Process of warranty claim and what to expect? There has been a recent surge in the population of small… 26 January 2023 Process of warranty claim and what to expect? Process of warranty claim and what to expect? Everything about your new house would be wonderful if you… 25 January 2023 Home Snow Removal? Remember These Spots Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a… 23 January 2023 Lower Bond Yields Mean Lower Fixed Mortgage Rates Lower Bond Yields Mean Lower Fixed Mortgage Rates Mortgage debtors may finally see some relief after…

How To File A Warranty Claim And What You Can Anticipate Read More »

Three Improved Ways to Understand Your Warranty

Blogs / / / , , , , , , , ,

Three Improved Ways to Understand Your Warranty Purchasing a home in the pre-construction phase can be a thrilling adventure. In addition, it may be quite lengthy. Your move-in date may be months or even years away from the time you sign the purchase agreement. The Ontario New House Warranty Program affords you certain guarantees as a buyer of a newly constructed home in the province. This protection lasts for a good long while as well, spanning both the time before you take possession (for things like deposits and improper delays). Moreover, the seven years after you take possession (for things like defects). While it’s important that you know what’s going on with your warranty, it’s understandable that you can’t focus on it 100% of the time. We hear you, and we know that you’d rather not be inundated with data. This is why we have included a variety of resources for education. These may be accessed at any point in the process of purchasing a new house. The following are some brand new resources that will be useful to anyone. They include individual who is either in the market for a new house or who has recently purchased one: Updated Brochures for Print and Web The pamphlet we offer, “Warranty Coverage for New Homes in Ontario,” has always been a best-seller. The new and improved version is even better. The Freehold Brochure, now revised and enlarged, is the best way to learn about the new home warranty. New information is included, such as the responsibilities of the homeowner, builder, and Tarion. Data Sheets Regarding Warranties Buyers of new houses and condos will see a change on February 1, 2021, when they get ready to sign the contract. This is because from now on, every new home purchase agreement and construction contract must include a Warranty Information Sheet signed off on by both the builder and the vendor. Depending on the home being sold, the Warranty Information Sheet may include a brief summary of the warranty coverage (such as deposit protection and compensation for closing delays). It emphasize the significance of the pre-delivery inspection, and point new homebuyers in the direction of additional resources. Buyers will be fully informed of the coverage to which they are entitled at the time of purchase thanks to the Warranty Information Sheet. Related posts 28 January 2023 Three Improved Ways to Understand Your Warranty Three Improved Ways to Understand Your Warranty Purchasing a home in the pre-construction phase can be… 28 January 2023 Can I Have A New Home Warranty Even If It’s Not New? Can I Have A New Home Warranty Even If It’s Not New? Did you buy a previously owned house recently?… 27 January 2023 How To File A Warranty Claim And What You Can Anticipate Process of warranty claim and what to expect? There has been a recent surge in the population of small… 26 January 2023 Process of warranty claim and what to expect? Process of warranty claim and what to expect? Everything about your new house would be wonderful if you… 25 January 2023 Home Snow Removal? Remember These Spots Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a… 23 January 2023 Lower Bond Yields Mean Lower Fixed Mortgage Rates Lower Bond Yields Mean Lower Fixed Mortgage Rates Mortgage debtors may finally see some relief after… 21 January 2023 Denied mortgage renewal: What happens next? Denied Mortgage Renewal:What happens next? If you want to keep paying down your mortgage after the current…

Three Improved Ways to Understand Your Warranty Read More »

Can I Have A New Home Warranty Even If It’s Not New?

Blogs / / / , , , , , , , ,

Can I Have A New Home Warranty Even If It’s Not New? Did you buy a previously owned house recently? A new home warranty may still be in effect if the home is less than seven years old. For the most part, Ontario’s new construction warranties cover a period of seven years. A fact that you might not know is that a home warranty is transferred to the property rather than the owner.  It is likely that the purchase of a resale home less than seven years old will include a warranty The terms of the new home warranty cover whoever owns the home for seven years after the original date of possession. However, assuming ownership of a resold property isn’t enough to transfer the warranty coverage. If you’ve just purchased a previously owned house, it’s imperative that you contact Tarion as soon as possible to let us know you’ve taken ownership. Tips for registering a house warranty on a previously owned property It’s important to have both the purchase agreement and the deed on hand. Please provide us with a copy of these papers so we can update our records. Once we have finished making the necessary changes to our system, we will send you an email confirming the alteration, along with your enrollment number and a link to MyHome. Here at MyHome, you can easily maintain tabs on your submitted paperwork and the remaining time on your house warranty. This tool can also be used to complete and submit any warranties that may apply to you. No company will  provide extensive warranty details over the phone prior to delivery, since this would violate their customers’ privacy. Once you’ve registered as the new owner in the system, the concerned company and individual will be able to inform you whether or not the home is protected by the warranty. Moreover, it would determine whether or not it’s enrolled with Tarion. Suggestions for ensuring that you take full advantage of any applicable warranty terms and conditions Closing dates that fall after the warranty form submission deadline can be a problem for homeowners. Is there anything you can do to remedy the situation? Know what your warranty covers before you start negotiating with the seller. Assist them with the necessary paperwork to make sure they don’t miss the submission date. While the seller’s priority may be getting out of the house and onto the next chapter of their lives, yours should be learning about the warranty protections you’ve earned. You should be conscientious and cooperative with the vendor in order to ensure that the warranty documents are submitted on time. Not submitting the paperwork in a timely manner could cause critical deadlines to be missed. Visit Tarion’s Learning Hub to find out crucial information regarding home warranty coverage and deadlines. A home buyer’s best bet is to find out about the property’s warranty terms before making a purchase. How to know the time that is remaining on the warranty? It is advised to consult with either a real estate agent or an attorney. They can inquire directly with the seller or contact us on their behalf to get warranty details such as the date coverage began, the name of the home’s builder, and whether or not the home has been occupied. Related posts 28 January 2023 Three Improved Ways to Understand Your Warranty 28 January 2023 Can I Have A New Home Warranty Even If It’s Not New? Can I Have A New Home Warranty Even If It’s Not New? Did you buy a previously owned house recently?… 27 January 2023 How To File A Warranty Claim And What You Can Anticipate Process of warranty claim and what to expect? There has been a recent surge in the population of small… 26 January 2023 Process of warranty claim and what to expect? Process of warranty claim and what to expect? Everything about your new house would be wonderful if you… 25 January 2023 Home Snow Removal? Remember These Spots Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a… 23 January 2023 Lower Bond Yields Mean Lower Fixed Mortgage Rates Lower Bond Yields Mean Lower Fixed Mortgage Rates Mortgage debtors may finally see some relief after… 21 January 2023 Denied mortgage renewal: What happens next? Denied Mortgage Renewal:What happens next? If you want to keep paying down your mortgage after the current…

Can I Have A New Home Warranty Even If It’s Not New? Read More »

Process of warranty claim and what to expect?

Blogs / / / , , , , , , , , , ,

Process of warranty claim and what to expect? Everything about your new house would be wonderful if you could just move in. It’s possible that you’ll discover anything that needs fixing, finishing, or installing after your builder has left. However it is important to ensure that builders meet minimal customer service requirements when addressing warranty repairs or issues with newly constructed homes. Submission of a Warranty Claim Submitting a warranty form initiates the warranty claim procedure. To ensure timely processing of your warranty claim, please submit all required paperwork after closing on your new home. When you file a warranty claim, Tarion and the builder are made aware of your concerns, and Tarion can step in to mediate any disputes about the guarantee, if necessary. Be as detailed as possible when describing the type and location of the issue on the warranty form. Photos, movies, and other visual evidence might be helpful as well. How and when to fill out a warranty form? If you have a warranty claim, please fill out one of these forms and submit it to Tarion: 30-Day Form: A 30-Day Form must be submitted within the first 30 days of ownership. Fill out this form to inform your builder of any issues that have emerged since you took possession of your house that were not addressed during your pre-delivery inspection. If you want to report multiple issues under warranty, please submit separate 30-Day Forms for each. Year-End Form: A Year-End Form must be submitted during the final 30 days of the first year of ownership. Please use this form to document any current warranty issues. Remember that the one-year guarantee is the most thorough, and that this is your last chance to notify Tarion of problems with things that fall under that warranty. You may lose warranty coverage for some purchases if you miss the deadline for submitting your Year-End Form. There is only one Year-End Form that will be approved. Second-Year Form: Anytime during the second year of ownership is acceptable to file a Second-Year Form. This form should be used to document any defects that fall under the two-year guarantee. In this window, you may submit as many Second-Year Forms as you feel is necessary. Major Structural Defect Form: Anytime after the second year of possession and before the seventh year from the date of possession is acceptable for filing a Major Structural Defect Form. Please fill out this form to report any severe structural defects that fall under the seven-year warranty. It is acceptable to submit several Major Structural Defect Reports. Once a warranty form is submitted, what happens? If you submit your warranty form within the allotted time frame, your builder has 120 days to address any covered issues. You have 30 days from the conclusion of the original repair period to contact Tarion and request a conciliation if your builder hasn’t repaired or otherwise resolved warranted items. This is true regardless of which warranty form you’ve filled out and submitted (30-day, Year-End, 2-year, or Major Structural Defect). After receiving your warranty form, Tarion will evaluate any disputed or missing items and let you know if they are covered or not through the conciliation procedure. Conciliation usually entails an unbiased representative from Tarion coming to your home to conduct an inspection. When a conciliation is requested, the builder is given an additional 30 days to address the issues listed on the warranty form. Your builder will need access to your home during the designated repair periods, during which you are responsible for granting them access to make any repairs and working with them to resolve any issues that may arise. There is a deadline for requesting a conciliation, after which the elements on your form will be removed and Tarion will no longer be able to help you. The Mediation Process for Warranty Claims Tarion will conduct the conciliation to determine if the items on your form are covered by the warranty. This happens if the builder does not settle them within 30 days of your conciliation request. The Tarion inspector will also review the paperwork you and the builder submit after the home inspection. Following the conciliation, Tarion will provide you and your builder with a written report detailing their findings. If Tarion determines a problem exists with a warranted item, the builder has 30 days to address the issue. Related posts 26 January 2023 Process of warranty claim and what to expect? 25 January 2023 Home Snow Removal? Remember These Spots Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a… 23 January 2023 Lower Bond Yields Mean Lower Fixed Mortgage Rates Lower Bond Yields Mean Lower Fixed Mortgage Rates Mortgage debtors may finally see some relief after… 21 January 2023 Denied mortgage renewal: What happens next? Denied Mortgage Renewal:What happens next? If you want to keep paying down your mortgage after the current… 19 January 2023 Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules More stringent rules on mortgage borrowing… 16 January 2023 Reasons a robust labour market could affect your mortgage interest rate Reasons a robust labour market could affect your mortgage interest rate Over the past year, Canada’s… 13 January 2023 Is it necessary to pay Toronto’s new vacant home tax? Is it necessary to pay Toronto’s new vacant home tax? The new Vacant Home Tax in the City of Toronto…

Process of warranty claim and what to expect? Read More »

Home Snow Removal? Remember These Spots

Blogs / / / , , , , , , , , , ,

Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a bit. Snow, like wind and rain, can do a lot of harm to our homes and health. During the winter months, it is crucial that we stay on top of the snow situation. Even if we’re all familiar with the process of shovelling snow or snow removal, how can you be sure that you’ve covered every inch of your property? Here are some popular (and some less common) areas that should always be part of your snow clearing routine, regardless of whether you’re a die-hard old schooler who swears by the shovel or an advocate for the ease and technology of a snow blower: Foundation It’s likely that you’ll move on to the areas immediately surrounding your house when you’ve finished with the driveway, front porch, and walkways. Keep the ground around your house’s foundation free as you work. It’s possible for snowmelt water to sneak into your home through foundation cracks. Before the winter season arrives, it’s important to check for cracks in these locations. In and out drives and sidewalks Preventing slips and falls and frost damage both necessitate clearing walks and roads. Hidden by snow, frost can wreak havoc on concrete and asphalt, causing cracks and other damage. You may avoid any unpleasant surprises in the spring by keeping these places free of snow. Roof Although many of us would rather leave the snow on our roof (it looks so pretty on holiday cards!) it is an area that need equal attention. Water infiltration can be caused by ice dams. These form when the roof surface is warm enough to melt snow but the air temperature is still cold enough to refreeze it. Use a roof rake to remove the first few feet of snow off your roof after a snowstorm. The alternative is to get some help from an expert. Pipes and valves for releasing exhaust gases outside As you clear the snow from around your home’s perimeter, check to see that the external exhaust pipes and vents. This is especially for your heating appliances (including your furnace, dryer, fireplace, and stove) are not blocked by snow or ice. Blocked exhaust pipes and vents can prevent these appliances from functioning properly, which can result in a fatal buildup of carbon monoxide. Wells in windows Get rid of the snow from the window wells of your home. When snow melts, it can seep into your basement and cause damage to your window frames, walls, and other finishes. This would be the case if it has accumulated in your window wells. Covering your window wells to keep the cold out is another option to think about. Related posts 25 January 2023 Home Snow Removal? Remember These Spots Home Snow Removal? Remember These Spots One constant of an Ontario winter is snow. Sometimes quite a… 23 January 2023 Lower Bond Yields Mean Lower Fixed Mortgage Rates Lower Bond Yields Mean Lower Fixed Mortgage Rates Mortgage debtors may finally see some relief after… 21 January 2023 Denied mortgage renewal: What happens next? Denied Mortgage Renewal:What happens next? If you want to keep paying down your mortgage after the current… 19 January 2023 Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules More stringent rules on mortgage borrowing… 16 January 2023 Reasons a robust labour market could affect your mortgage interest rate Reasons a robust labour market could affect your mortgage interest rate Over the past year, Canada’s… 13 January 2023 Is it necessary to pay Toronto’s new vacant home tax? Is it necessary to pay Toronto’s new vacant home tax? The new Vacant Home Tax in the City of Toronto… 13 January 2023 Difference between Pre-qualification and pre-approval Difference between Pre-qualification and pre-approval The terms pre-qualified and pre-approved are often…

Home Snow Removal? Remember These Spots Read More »

Lower Bond Yields Mean Lower Fixed Mortgage Rates

Blogs / / / , , , , ,

Lower Bond Yields Mean Lower Fixed Mortgage Rates Mortgage debtors may finally see some relief after months of steadily increasing rates. Five-year fixed mortgage rates have declined modestly over the past week in response to falling bond yields. Moreover, economic indicators suggest we may have already seen our last price peak. Bond yields on Canada’s five-year government issue have dropped below 3% again, to 2.8% as of January 18th. That’s a drop of 61 basis points from the last day of December, and a change of 22 basis points in just one week. The best mortgage rate in Canada has dropped to 4.39% from 4.54% last week. This has happened as a result of this trend among several financial institutions to reduce their fixed five-year rates. Of course, a difference of only 15 points may not seem like much. However, in the current high interest rate climate, it’s encouraging to see any glimmer of respite. In addition, if the economy continues on its current path, fixed-rate borrowers may see further rate stabilisation. The Canadian mortgage rate should be at or near its high right now, according to BMO Senior Economist Robert Kavcic’s research paper. The Bank of Canada is widely anticipated to increase rates by another 25 basis points next week. This may halt the ongoing rise in variable mortgage rates. Canadian five-year bond rates have fallen below the lows reached in December. This is due to the recent recovery in the U.S. Treasuries and Government of Canada bonds. The current interest rates are far higher than the 1.5–2% range that was accessible a year ago. He further says that the “pause in upward momentum should help at the margin, and offer some comfort that the worst of the rate shock is behind us.” A drop in bond yields Bond yields are currently falling due to optimistic inflation data due out this week. Moreover, due to the rising views that the Bank of Canada is finishing its rate hike cycle. Reason being, changes in the economy are immediately reflected in the yields. Demand for government bonds tends to rise when economic conditions are favourable. Thus, driving up bond prices and reducing bond rates. Let’s examine the bond market in more detail to help you understand it. What is a bond? Bonds are a sort of investment whereby the investor receives a return (sometimes called a yield) in exchange for investing funds for a specified period of time (the most popular are two-, five-, and 10-year terms). When a bond matures at the end of its term, the investor gets their initial investment back plus any interest accrued. Bonds compete with one another based on the amount of interest income they provide. Any bonds issued following the interest rate increase will be worth more than the existing bonds. That’s because current bonds lose value whenever the Bank of Canada raises interest rates, forcing sellers to cut prices. Bond yields need to rise as bond prices fall so that they can continue to attract buyers. They have risen by approximately 350 basis points from their lows due to the Bank of Canada’s decision to raise its benchmark interest rate by 4% between March 2022 and December 2022. Thus, bringing its Overnight Lending Rate to 4.25% today. The effects of inflation on bond prices Bond yields are lowered by inflation because of the erosion of purchasing power caused by rising consumer prices. The persistently high rate of inflation, which reached a 40-year high of 8.1% this June, has contributed to a rise in bond yields for the year 2022. But the most recent CPI in December indicated inflation rise had slowed to 6.3%. Further suggesting that the Bank of Canada would pause its rising cycle or delay any rate movement in its upcoming January 25th statement.  This has lifted bond demand (and hence lowered yields). To give you an idea of how inflation affects bond yields, consider that in September 1981, when Canada’s CPI was a stunning 12.47%. Moreover, the country’s highest ever five-year yield was 18.78%. In contrast, the lowest yield ever recorded was in March of 2020, when it hit a record low of 0.276 percent due to tepid price increases (0.9 percent). This was due to widespread panic over a potential pandemic. Why do yields have such an impact on fixed mortgage rates? Bonds issued by the Canadian government are widely regarded as a safe and lucrative investment option. This is due to their high liquidity and low risk profile. As such, consumer lenders use them to establish the benchmark cost for fixed-rate borrowing products. Typically a spread of 100 to 200 basis points above the five-year yield (the best five-year rate as of today is 4.39 percent, 159 basis points above the yield). If yields continue to decline, borrowers can anticipate even more substantial reductions in their fixed mortgage rates from their financial institutions. Conclusion Today’s fixed mortgage rates are still higher than they were a year ago. However, there is growing hope that inflation’s slowdown will help them stabilize or slightly decrease in the near future. This is wonderful news for anyone in the market for a mortgage. Borrowers should do their due diligence in the coming months. This is to ensure they are receiving the best rates possible. It is because rate conditions can change rapidly in response to shifting economic conditions. Free of charge, you can stay abreast of market shifts by establishing contact with a mortgage broker. Related posts 23 January 2023 Lower Bond Yields Mean Lower Fixed Mortgage Rates Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules Mortgage debtors may finally see some… 21 January 2023 Denied mortgage renewal: What happens next? Denied Mortgage Renewal:What happens next? If you want to keep paying down your mortgage after the current… 19 January 2023 Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules More stringent rules on mortgage borrowing… 16 January 2023 Reasons a robust

Lower Bond Yields Mean Lower Fixed Mortgage Rates Read More »

Denied mortgage renewal: What happens next?

Blogs / / / , , , , , , ,

Denied Mortgage Renewal:What happens next? If you want to keep paying down your mortgage after the current term ends, you’ll need to renew it. You will have to repeat this procedure several times before your mortgage is paid off. Lenders typically issue renewal offers a few months before a term ends. A new mortgage rate and a slip to sign and return will be included in the offer. The new rate and term length will match your present mortgage. This may be more convenient, but it doesn’t guarantee acceptance. The long-term costs can add up, so it’s best to look into other options when it’s time to renew your service. So, what happens if your application to renew your mortgage is denied? Don’t freak out right away; there are things you can do. If you have been denied a mortgage renewal, please follow these steps. The Reasons Your Mortgage Renewal Was Denied First, depending on who you’re dealing with, there are two potential reasons your mortgage renewal application could be rejected. Lender refuses to renew the loan The fact that your present lender doesn’t have to re-qualify you is a positive factor in remaining with them (for example, determine your debt service ratios and require you to pass the mortgage stress test). If you have been making your mortgage payments on time and haven’t missed any throughout your current term, your lender shouldn’t have any reason to refuse your renewal application. However, your lender will still look at your present financial circumstances to see if you have accumulated more debt than it thinks you can afford to repay, if your credit score has taken a hit, or if your work situation has changed for the worse. Your present lender has the right to not renew you if it has any worries about your financial situation. Using our mortgage payment calculator is a great idea before your renewal date rolls around. Your mortgage renewal could be denied if you have a hard time seeing how you’ll be able to keep up with payments given the present interest rates. The new lender will not approve the renewal. You can try to renew your mortgage with a different lender if your present lender refuses to do so, or if you just wish to compare rates (you can contact a mortgage broker or mortgage agent to help you find a new lender). To make matters worse, switching lenders actually increases your likelihood of getting rejected for financing. This is because renewing your mortgage requires a fresh application. After reviewing the renewal slip provided by your current lender, the new lender will learn nothing about your financial status other than the outstanding balance of your mortgage. Therefore, it is necessary that you pass a mortgage stress test in addition to having your income and credit verified before it can approve your application. If you’ve been late on mortgage payments or otherwise ruined your credit, you may have a hard time getting approved by a new lender. In that situation, you may choose to stick with your present lender as it doesn’t have to re-qualify you. If you’re in the market for a new mortgage and have some time until your current one expires, check out our mortgage affordability calculator to get a sense of how much you might be able to borrow. Keep in mind that the best fixed and variable rates on the market today are both higher than 5.25%, so you should run that scenario when determining what you would be able to pay as a new applicant in order to pass the mortgage stress test. You can expect this information to be used by a potential new lender in making a decision about whether or not to extend you credit. Steps to Take If Your Renewal of Your Mortgage Is Refused If your application to renew your mortgage was rejected, what should you do now? Let’s imagine you tried to find a better deal by approaching a new lender, but were turned down. If you want to keep paying your mortgage, the first step is to talk to your lender about renewing your loan. For those who have been turned down by their present lender: In the event that your existing lender refuses to renew your mortgage, or if a new lender declines to do so, you will need to find another lender or pursue alternative options. If your mortgage renewal was declined by your existing lender, you have several choices, listed from best to worst. Locate a class B lender. Talk to B lenders about your position if your first mortgage was with an A lender like a bank or credit union. Institutional lenders with a B rating are often trust businesses or those who specialise in lending to those with poor credit. People with poorer credit scores and/or higher debt loads are more likely to receive a loan from them than they would be from a lender with a grade of A. Make contact with a private lender. Your chances of getting approved by any lender are slim if your credit score is below 620. A private lender is an option if this situation arises. This is not an ideal situation because private lenders typically offer the highest mortgage interest rates available. Put your house up for sale. You might have to sell your home if you can’t acquire a mortgage that works for your budget. Since you’ll have to sell your home and relocate quickly, this is the worst conceivable scenario. You might not have enough time to consummate the sale and renew your mortgage before the term ends. To get by, you may need to get a short-term or open mortgage, whether from a B lender or a private lender. Related posts 21 January 2023 Denied mortgage renewal: What happens next? Denied Mortgage Renewal:What happens next? If you want to keep paying down your mortgage after the current… 19 January 2023 Canada’s Bank Regulator Wants Tighter Real

Denied mortgage renewal: What happens next? Read More »

Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules

Blogs / / / , , , , , , ,

Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules More stringent rules on mortgage borrowing could be on the horizon for Canadian homebuyers. The Canadian banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), has issued a call for comments on proposed new regulations. This intended to limit banks’ use of leverage and lessen their exposure to risk. Risk instruments like the stress test have proven their worth. Now they’re looking to fill any holes that have opened up because of this.  Possible Income-Based Loan Limits for Canadian Mortgage Borrowers There may soon be limits placed on how much money an individual or family can borrow in relation to their income, known as loan-to-income (LTI) or debt-to-income (DTI) ratios. The level of household debt as a percentage of disposable income is expressed as the LTI ratio. A loan-to-income (LTI) ratio of 200% indicates that the borrower has taken on debt equal to twice their annual salary. Borrowers are termed overleveraged or heavily indebted when their LTI ratio for their mortgage is 450% (4.5x income). If a borrower’s balance drops below this critical point, they are at risk of a financial crisis. There are currently no limits placed on the total amount of loans at this tier. OSFI research indicates that the Q3 2022 will witness over one-third of all new mortgages issued to borrowers who are already in financial distress. However, since the beginning of the epidemic, highly leveraged borrowers have become a larger portion of the market, despite the fact that their share has dropped from 40% to 20%. OSFI is considering a change in this by implementing a “high LTI threshold” of 4.5x for mortgages. This wouldn’t get rid of them because there are buyers out there. These buyers have high incomes and good credit histories for whom lenders consider them lower risk. The proportion of these mortgages that the lenders can be capped at 25%. It’s better than the pre-crisis average of 23.8 percent. However, it still implies 8.7 percent of recent loans wouldn’t have been as large as they were in the most recent reported quarter. The predicted result is a lessening of leverage, which should make the system more resilient to shocks. In addition, it would reduce leverage, so limiting the market’s overall capacity. Given the rise of highly leveraged speculators who are outbidding end consumers, this is likely a positive development. New Zealand just instituted a similar policy, and it’s having a major effect. While not quite as significant as increased interest rates. Debt Service Coverage Regulations Aim to Curb the Plight of Overleveraged Mortgage Borrowers The OSFI is also thinking about imposing debt service coverage requirements, which would cap financial commitments at a specific percentage of income. In the case of insured mortgages, federally supervised lenders already deal with these. Gross debt service ratios are used to make sure that mortgage payments for insured borrowers do not exceed 39% of monthly gross income (GDS). Using a debt service ratio, total monthly debt obligations (including mortgage payments, car payments, and student loan payments) cannot exceed 44% of income (DSR). “Beyond those requirements, B-20 does not articulate limits on GDS and TDS for uninsured mortgages and generally permits FRFIs to establish debt serviceability metrics under their RMUPs that facilitate an accurate assessment of a borrower’s capacity to service the loan,” according to the industry consultation documents. To put it another way, neither GDS nor TDS impose any restrictions on federally chartered lenders in regard to uninsured mortgages. Risk management strategies should include a prohibition on irrational lending practices. There is, however, no universally applicable rule or policy that applies to all federal loan providers. OSFI is mulling over a policy shift that would see comparable regulations applied to lenders. It could be targeted at the borrower specifically or implemented across the board for all of the lenders. To that end, they advocate for capping amortisation periods at reasonable levels. The end goal is ostensibly another limit on leverage in case a borrower circumvents the others, albeit this one might not have as much of an effect. Consumer loans in Canada, such as auto loans, could be subject to a revised stress test The traditional “mortgage stress test” has been updated to include interest rate affordability testing. The amount of leverage a mortgage borrower can use is currently limited by a minimum qualifying rate (MQR). People tried to fit themselves into the one-size-fits-all approach, but ended up switching to variable-rate mortgages in search of a better interest rate. Many borrowers with variable rates are now paying interest rates higher than the stress test rate, so that strategy didn’t work out so well. To mitigate this threat, OSFI is considering implementing multiple MQRs depending on the specifics of each product’s risk profile. Consider the fact that a mortgage with an adjustable interest rate has proven to be riskier than a mortgage with a fixed rate. The qualifying rate would be lower for longer fixed terms since there is less potential for payment shocks. It would be fascinating if the regulator also considered testing for consumer debt payments. They imply that it may be necessary to explicitly emphasise the necessity of comparing the stress test rate to the TDS ratio, which is not currently done. Conclusion Soon, a stress test could be implemented for retail loans. Non-mortgage retail financing could be subjected to a stress test, according to the obliquely phrased consideration. Retail lending that is not secured by a mortgage, such as car loans, has been on the rise as record highs are approached. This isn’t such a bad plan. Despite common misconceptions, OSFI’s input time isn’t for mere consideration. They are answers to problems that they may not have fully explained to the general audience. There is more of a “why shouldn’t we do this?” tone to the discussions. There seems to be no reasonable explanation for the sudden rise in the prevalence of excessive leverage in the property market. Further underwriting policy is

Canada’s Bank Regulator Wants Tighter Real Estate Risk Rules Read More »