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Essential facts about mortgage

Blogs / Amy / 4 January 2023 / bankofcanada, canadianhousing, homebuyer, homemortgage, homeprice, interest, mortgage, mortgagerates, mortgagevalue, newhome, rates

Essential facts about mortgage A mortgage, at its most basic, is a debt taken out to finance the purchase of real estate. A mortgage, like any other loan, has parameters such as an interest rate and an amortisation (payment) schedule. Mortgages are secured by the collateral of the home itself. This means that the mortgage lender has the right to take back the home if the mortgage holder defaults on payments. It is important to understand the following ideas before applying for a mortgage. That will help you receive the best mortgage possible: Term- During the term of your mortgage agreement, you are obligated to make monthly mortgage payments. Rental periods might be as short as six months or as long as five years. Rate of interest- the cost of carrying a mortgage. A portion of each monthly mortgage payment goes toward reducing the loan’s principle balance, while the rest covers interest accrued. Open or closed mortgage- How much leeway you have in determining when and how much of your mortgage payment you make each month determines whether your mortgage is open or closed. You’ll need an open mortgage if you ever want to modify the loan in any way, including renegotiation, refinancing, or repayment. A closed mortgage will limit your options. But the interest rate is usually lower on these types of loans. Mortgage amortization- It is the time it will take to pay off your loan in full. For mortgages, the standard amortisation time offered by the country’s major lenders in Canada is from five to twenty-five years, with a maximum of thirty years available with a twenty percent down payment. In most cases, borrowers will need to wait until the end of many mortgage periods before making the final payment. Fixed or variable mortgage- Mortgage interest can be either fixed (staying the same for the duration of the loan) or variable (changing periodically). Rates of interest on variable-rate loans can rise and fall in response to fluctuations in the market.is How long will it take to pay off your mortgage The length of your mortgage is different from the time it takes to pay it off. The length of time during which you make payments on your mortgage is known as its amortisation period. With a 20% down payment, the standard amortisation length offered by most Canadian lenders is 25 years; with a larger down payment, this number can rise to 30 years. In general, the lower the amortisation term, the lower your interest payments will be over the life of your loan, but the larger your regular mortgage payments will be. should I go for the highest possible amount? For first-time buyers, it’s also vital to consider how much of a mortgage they can comfortably make each month. There are practical matters to think about in your house search regardless of the size of the loan you can afford. First and foremost is the reality that variable interest rates will almost certainly increase in 2022 due to a likely rate hike by the Bank of Canada sometime in the first quarter, maybe in April. The uptrend in fixed rates is expected to continue. Not only should you be aware of the growing rates, but you should also be aware of the fact that many experts advocate setting aside at least 10% of your gross pay for retirement (and some even propose as much as 30%). When borrowing money, it’s best not to borrow more than you can comfortably repay in a single payment. Mortgage affordability calculators can be helpful if you’re not sure how much house you can afford. You should always double-check the results of these tools with a broker who is familiar with the nuances of your financial situation, as they are only meant to provide estimates. How can I determine whether I need adaptability or stability? The choice between a fixed or variable interest rate, a longer or shorter term, a shorter or longer amortisation period, and a larger or smaller mortgage balance all comes down to personal preference and tolerance for risk. If you want to stay within your financial means and at the same time feel at ease, you need to be practical. And fortunately, you can rely on others to help you get the best mortgage for first-time buyers. A mortgage broker can help a first-time buyer get the best mortgage rate and lender for their situation by comparing products from numerous sources.

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The concept of contracting a home insurance agreement.

First-time homebuyer Government incentives and tax credits

Blogs / Amy / 4 January 2023 / credits, firsttimehomebuyer, government, governmentincentives, homebuyer, homepurchase, incentives, tax, taxcredits

First-time homebuyer Government incentives and tax credits First-time homebuyers can take advantage of a number of government programmes and tax credits. The Home Buyers’ Plan enables you to access up to $35,000 from your RRSPs ($70,000 for a couple) for a down payment on your first home. If you return the funds to your RRSP within 15 years, you won’t owe taxes or face a penalty. The First-Time Property Buyer Incentive provides a zero-interest loan of up to ten percent of the purchase price of a home to qualified first-time purchasers. After 25 years or upon the home’s sale—at the time’s fair market value—the government is entitled to repayment of its initial investment in the property. While the scheme has its advantages, mortgage broker Patton warns that it may restrict first-time buyers’ budgets. This is one of the main reasons why the federal government decided to prolong the programme through March 31, 2025, as part of the 2022 budget. Furthermore, the government has stated that “solutions are being explored to make the programme more flexible and sensitive to the needs of first-time home buyers, especially single-led households.” Canadians who have not been homeowners for four years or more are eligible for the Home Buyers’ Tax Credit. The maximum tax credit available to first-time homeowners is $5,000 (equivalent to a $750 refund). For properties purchased on or after January 1, 2022, the federal government proposed doubling the credit to $10,000 in its 2022 budget. Homebuyers could receive a refund of up to $1,500 as a result of the revised credit amount. FHSA, the pioneering first-time homebuyer savings account The federal government will introduce a new type of registered account in the 2022 budget to assist first-time homebuyers in saving for a down payment. Like a tax-free savings account (TFSA) or a registered retirement savings plan (RRSP), earnings on interest, dividends, and capital gains are not subject to taxation, and neither are contributions to or withdrawals from the account. No unused contribution space can be carried over from year to year, and first-time homebuyers are not eligible to use both the FHSA and the Home Buyers’ Plan. The maximum annual contribution for an individual is $8,000, with a lifetime maximum of $40,000. Any money left in an FHSA after 15 years must either be utilised to buy a home, moved to an RRSP or RRIF, or removed as taxable income. In 2023, FHSAs will become available thanks to the government’s collaboration with financial institutions. To qualified buyers, the governments of Ontario, British Columbia, and Prince Edward Island all give tax refunds on land transfers, and the city of Toronto does as well. The eligibility requirements and potential payout amount are territory-specific.

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What is the real cost of homeownership?

Blogs / Amy / 3 January 2023 / canadianhome, canadianhomeprice, home, homebuyer, homecost, Homeownership, homepurchase, housingprice, housprice, realestate, realestatecanada

What is the real cost of homeownership? Many people who are buying their first house may need to take out a loan. There are costs associated with completing a purchase. These expenses can add up quickly, so it’s crucial to include them. It is not uncommon for there to be additional, unseen costs on top of all the regular ones. Following is a detailed explanation of everything. First Investment Costs The initial outlay of cash you’ll need to buy a home is called a “down payment,” and we’ll talk about that first. Your down payment must be cash that you now possess or have access to (for example, savings, a gift, or RESP withdrawal) (RRSP). The minimum down payment required by the Canadian government varies with the home’s buying price. First-time buyers, according to Patton, typically have a lesser down payment than repeat buyers because they don’t have any accumulated equity in a previous house. If you’re a homeowner and your home appreciates in value, you can put that money toward a bigger deposit on another property. Mortgage loan insurance, also known as mortgage default insurance, is an extra expense that must be accounted for by buyers who put less than a 20% down payment on a home. hidden expenses of buying a house Look into some of the hidden expenses of buying a house. Transaction Fees There are a few last expenses that must be covered before you can take legal ownership of your new house and turn in the keys. Money paid out for legal services, property insurance, interest adjustment, and title insurance are all examples. Although there is no universally accepted benchmark, these expenses usually amount to between three and five per cent of the home’s purchase price. Land Taxes The assessed value is used to calculate your property tax. There is an annual deadline for these, but if you add the amount to your mortgage payment each month, the lender can handle the payment on your behalf. Prices associated with the upkeep Maintaining a home is an ongoing responsibility. It takes time and money to complete any project, no matter how large or small. Even if significant maintenance tasks like re-roofing or replacing windows and doors aren’t required very often, it’s still crucial to keep track of them so you’re not caught off guard by an unexpectedly high bill when they do come up. The Price of an Emerging Situation Having some savings set aside in case of an emergency is a prudent move. Keep this in mind while you look for a property, as older homes may require more maintenance than a recent one. Some of the emergency repairs you should be ready for include: roof repairs, tree removal, bathroom sink/toilet repairs, appliance replacement, and HVAC system repairs.

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Is it ok to invest in a home?

Blogs / Amy / 3 January 2023 / home, homeinvestment, homeprice, homepricing, Housing, invest, investment, pricing, realestate, realestatecanada, realestateprice

Is it ok to invest in a home? As a homeowner, you have control over your living situation and financial future, rather than being at the whim of a landlord who can unilaterally decide to stop renting out the property at any time. Canadian real estate is a safe bet because of its historical trend of rising prices. According to Josh Davie, a financial advisor at Desjardins Financial Security Investments Inc., while owning a home is a desirable objective for many people, it is not the best choice for everyone. He states that it is dependent on the individual’s particular circumstances. If, for example, the future of your career is unknown and/or you anticipate moving in the near future, renting may be a better financial alternative for you because it allows more flexibility than buying a home. People who do not want to deal with the obligations that come along with house ownership, such as taking care of repairs and paying property taxes, may find that renting is a more suitable option for them. You shouldn’t feel pressured to purchase into real estate, as Davie suggests, especially if you believe you aren’t financially stable enough or don’t have the abilities necessary for effective financial management to handle the responsibilities of homeownership. Sharon Patton, a mortgage broker who operates in the Greater Toronto Area (GTA), is of the same opinion. “People who prefer more hands-off living are frequently better suited to renting since the landlord will maintain the property,” she explains. “People who want more hands-on living are often better suited to owning their own home.” If you don’t want to be responsible for paying for incidentals like property taxes, utilities, house maintenance, or unforeseen repairs, renting is the best option for you.

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After Variable Shock, Canadian Homebuyers Choose Fixed Terms

Blogs / Amy / 2 January 2023 / bankofcanada, canadabuyers, Canadian real estate, canadianhome, Homebuyers, homeprice, housingprice, realestate, realestateprice

After Variable Shock, Canadian Homebuyers Choose Fixed Terms Overstimulated Homebuyers in Canada are avoiding adjustable-rate mortgages. Mortgage borrowers in Canada favoured fixed interest rates over variable ones in October, according to data from the Bank of Canada (BoC). At the beginning of the year, a majority of new borrowers selected adjustable-rate mortgages. As rates return to normal and fixed rates become more affordable, this pattern is quickly changing. Mortgage borrowers in Canada are becoming more comfortable with adjustable-rate loans As interest rates climb, fewer Canadian families are selecting variable rate mortgages. Of all the new uninsured mortgage loans extended in October, only 29.7 percent of it came with adjustable rates. That’s a big drop from the 40.1% recorded a month ago, and even bigger drop from the 60.1% recorded in January 2022, when rates peaked. Uninsured debt was more likely to use variable rates, while insured debt also saw growth during this period. Percentage of Canada’s Mortgage Credit Extended at Variable Rates The market share of variable rates for insured mortgage finance had a similar boom and bust. A little over a quarter, or 24.1%, of October’s new insured mortgage debt was for variable expenses. This is down from the previous month’s 34.1% and the all-time high of 39.3% in January 2022. That’s a dramatic change in terms of time spent and money spent. In Canada, interest rates on adjustable-rate mortgages have been creeping higher The rising cost of borrowing has caused a shift in priorities among Canadian mortgage borrowers. In October, the average interest rate for an unsecured loan with variable terms was 5.53%. The interest rate was significantly higher than the national average of 5.18% seen across all loan types. That is to say, fixed-rate mortgages were mostly responsible for the overall decline in the national average. No Longer A Discount For Canadian Mortgages With A Variable Rate When the market share peaked in January, this wasn’t the case. When compared to the overall average of 1.89% in the same month, the average rate for uninsured variable rate mortgages was only 1.45%. If your mortgage’s variable interest rate doesn’t unexpectedly increase, you could save quite a bit of money. Changes were also seen with loans that had to be insured. In October, the average interest rate on all mortgages was 5.18%, while the average interest rate on variable loans was 5.53%. In January, variable-rate loans averaged 1.51 percent, roughly 50 basis points (bps) below the overall average. It would appear that borrowers are just choosing the lowest interest rate loan available. When you consider that a sizable portion of the market consisted of short-term investors, you can see the logic behind this. Traditional repayment plans with set terms are preferred by the majority of Canadian households. They may be more expensive, but they offer security and piece of mind. It’s surprisingly mature, but it hasn’t happened in the past two years. The Bank of Canada’s low rate stimulus resulted in a significant discount for variable rate loans As central banks lagged behind the market, the chasm widened. Inflation, rising bond yields, and low unemployment were all completely disregarded. Too good to pass up, this steep bargain turned out to be a trap. Especially considering the exceptional action taken by the central bank in offering low rates to households till next year.

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Happy couple buying new home and receiving house keys form real estate agent.

Questions asked by every CONDOMINIUM PURCHASER

Blogs / Amy / 30 December 2022 / buyer, condo, condobuyer, condominium, condopurchase, purchase, question

Questions asked by every CONDOMINIUM PURCHASER Buying a brand-new condominium is a thrilling experience, and that’s putting it mildly. However, when you begin to feel more at home in your new surroundings, you may have some questions. Some of the more frequent examples are listed below. How might my situation be affected by interim occupancy? Before the entire development is registered with the local municipality, you may move in, but you won’t be the legal owner of the unit. The time between when you receive the keys to your new condo and when you assume title to the apartment is known as “interim occupation” (when you own your home) There will be a monthly charge paid to the builder during this time that will cover the interest accrued on the remaining debt, the estimated municipal taxes on the unit, and the estimated costs of maintaining the property. When the developer finishes the condo and the condo association is officially registered with the land registry, the interim possession period ends. During this time, you and the builder will decide upon a closing date, which is the day you will officially become the owner of the property. Who can file a claim for a warranty? Within the first 30 days of moving in, you are eligible to submit your first warranty claim for the one-, two-, or seven-year unit warranty that kicks in when you take possession. Everything from the unit’s walls and flooring to its cabinets and counters is covered by the guarantee, as long as it’s located inside the unit’s boundaries. You, the unit’s owner, must file all warranty claims with the building’s developer and Tarion. If you are a homeowner, you can fill out the warranty documents for your home and submit them to your builder and Tarion all at once using our online service, MyHome. We urge all new condo owners to sign up for MyHome as soon as they move in. When do I get to see the limits of my unit? A “unit” in a condominium complex is what a buyer acquires upon making such a purchase. Your builder should have issued you with a copy of the condominium project’s Declaration and Description, which will outline the boundaries of your unit. This will serve to define your group’s confines and its shared resources. When problems arise, whose responsibility is it to file a warranty claim, and what common components are involved? In a condominium complex, the unit owners collectively share the common elements. In most cases, the units themselves are not included but everything else on the property is. The recreation room, lobby, elevators, and parking garage are all staples. You may also have access to ‘exclusive common components,’ depending on the condo unit type you purchase. Things like a balcony that you use exclusively would fall under the purview of the common elements warranty but are not shared with other tenants. Since the condo corp is technically the “owner” of the project’s shared spaces, it is the only entity authorised to submit and manage warranty claims for these areas to the developer and warranty administrator, Tarion. When the condominium development is first recorded with the city, the warranty on the shared parts goes into effect

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BoC Index: Canadian Housing Affordability Unsustainable

Blogs / Amy / 29 December 2022 / affordability, canadianhousing, Housing, housingaffordability, housingplans, housingprice, realestate, realestateprice

BoC Index: Canadian Housing Affordability Unsustainable Even while Canadian real estate has never been cheap, it has rarely been this costly in recent history. For the third quarter of 2022, the Housing Affordability Index (HAI) published by the Bank of Canada (BoC) reached a new record high not seen since 1983. What this means is that it is extremely difficult for the typical American family to purchase a home anywhere in the country. Housing prices have reached an unsustainable high that has never been maintained for long. Mortgage Credit Availability Measure of Canada The Bank of Canada Affordability Index measures how much of one’s income would have to go toward housing costs. The real cost is likely more than what is reflected because only principal and interest payments and utilities are considered. The median annual take-home pay is utilized. The median list price for a home is calculated using data from the past six months. The mortgage interest rate is a composite of the discounted variable rate and the 1-, 3-, and 5-year fixed rates. Water, gas, and electricity are all examples of utilities that can be used as currency. It’s conceptually comparable to the RBC and NBF affordability indices. If the ratio is large, then purchasing and maintaining the home will be difficult financially. The BoC utilizes average income, which is typically higher than the median for households, in contrast to RBC and NBF. In addition, several indices employ the median rather than the average because the average fails to take into consideration quality and size. Many people rely on a benchmark pricing that already accounts for these factors. We do not think the Bank of Canada index accurately reflects the true costs of housing. Nonetheless, it’s helpful for validating trends and resting assured that the problem is being tracked. The fact that they actually care about the information it contains is another story. The Canadian Housing Market Is Becoming Less Affordable. The index shows that the cost of purchasing a home in Canada increased significantly during the past three months. In Q3 2022, according to the HAI, a typical family will need to spend 48.8% of its income on housing costs. Increases of 0.4 points from the previous quarter and 11.1 points from the previous year. Home price decreases capped the month-over-month gain. When it comes to the deterioration of affordability, however, an annual rise of more than 11 percentage points is still an outrageous move. It’s impossible for Canadian home prices to remain at this level for long The housing affordability index has never been this low. Only two quarters in the 1990s surpassed this level of income proportionality. Only eight quarters in the preceding half-century have been less cheap than the current one. Having a bubble that is comparable to two of Canada’s largest is, to put it mildly, undesirable. The indicator has hit an alarming level, as confirmed by a number of financial institutions. NBF issued a dire affordability warning earlier this month, saying it was the worst it has been since the 1980s. According to RBC’s estimates, our current level of affordability is worse than anything seen since the 1980s. There is no positive information to be found among any of these numbers. The upshot is the same: the cost of housing in Canada has risen to unaffordable levels. A number of businesses anticipate near-term deterioration but acknowledge there is always the possibility of things becoming better. This problem, however, has never lasted for very long. Countries where the typical family cannot afford a safe place to live typically offer a subpar value proposition.

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Fitch Ratings: Canadian Real Estate Prices to Drop Double-Digit, Delinquencies Rise

Blogs / Amy / 29 December 2022 / delinquencies, doubledigit, pricedrop, prices, propertyowner, ratings, realestate, realestatemarket, realestateprice

Fitch Ratings: Canadian Real Estate Prices to Drop Double-Digit, Delinquencies Rise According to a major credit rating agency, the decline in the value of Canadian real estate will continue into next year. The 2023 projection that was provided by Fitch Ratings predicts significantly lower property prices for the following year. After three decades of steady price growth with no signs of abating, the affordability of housing is at an all-time low. When high rates are included in the equation, a decrease in demand is likely to occur in the near future as housing prices adjust. It is also anticipated that the cooling market will create a significant increase in the number of delinquencies. It is anticipated that prices of Canadian real estate will drop next year The recent prediction of declining real estate values across Canada was made by Fitch Ratings, the most recent company to make such a prediction. It is anticipated that prices will drop by between 5% and 7% in the year 2023, representing a nominal decrease of 15% from the peak to the trough. When inflation is at such a high level, it is essential to emphasise the importance of nominal terms. It is anticipated that prices would resume their upward trend in 2024, albeit at a slower pace than usual. The Rate of Canadian Mortgage Defaults Is Expected to Sharply Increase The percentage of Canadians who are behind on their mortgage payments is expected to climb dramatically during the next few months. The Fitch Ratings prognosis for the delinquency rate in 2023 is 0.25%, which is an increase of 11 basis points (bps) from this year’s projection. The increase is quite dramatic when one considers that it indicates more than a 75 percent increase in mortgage delinquencies. The rate is still quite low, and it is mostly compensating for the historically low rates that are typical of bubbles. Indeed, there is a low rate of delinquency in bubbles. According to the company, there is no justification for going into default if the residence is sold in a matter of days or less. If the market is doing well, a borrower who is having trouble can sell their home and avoid going into default on their mortgage. Fewer people are willing to acquire that property at this price since it is not affordable for them, and demand is not particularly strong. In most cases, this is what causes an increase in criminal behaviour. Homeowners in Canada are sitting on a mountain of equity, which will help keep interest rates from becoming unreasonably high. They have the ability to draw on or borrow against, that equity if they find themselves in a difficult situation regarding the cost of living. It also means that they will have a lower risk of entering a scenario in which they have negative equity and the lender forces them to sell the property. According to the projection made by the company, lenders have also been collaborating with borrowers. Numerous current borrowers have been receiving amortisation extension offers from financial institutions. It will set you back more money, but the higher interest rates will make it less likely that you will default on your payments. The latest company to make these predictions is Fitch Ratings, which sees a decline in housing prices and an increase in defaults. Companies such as BMO, Oxford Economics, and RBC have all predicted more significant price declines in the future. This is most likely attributable to the more pessimistic outlooks that those companies have in contrast. If the economic contraction is more severe than expected, Fitch anticipates a further fall in prices.

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Renting is increasing among all ages. There is a need for better legal protection—and respect

Blogs / Amy / 27 December 2022 / Canada, city of toronto, home prices, Homebuyers, housing market, interest rates, legal, legalprotection, mortgage rates, realestate, rent, rentals

Renting is increasing among all ages. There is a need for better legal protection—and respect After decades of reliability, the Canadian dream of homeownership is beginning to look more like a pipe dream. Rising interest rates and stagnant property markets have put a strain on potential purchasers’ budgets, forcing them to look for alternative housing options, such as renting. Despite being a numerical underdog, renters are outpacing homeowners at a rate three times as fast. The tenants may not be who you expect them to be. One thing to keep in mind is that the emergence of the rental country is not limited to urban areas. According to census data highlighted in a report from Royal Bank this month, the growth of renters in smaller cities surpassed that of major urban centres during the past decade. And the rental population is ageing; baby boomers are the fastest-growing segment of renters. The analysis predicts that “demand for rental housing will continue to be driven by these demographic and behavioural trends” in the years to come. An increasing number of people are opting to rent rather than buy, highlighting the need to revamp inadequate financial and legal safeguards and our perception of tenants for the long haul. Owning a property in Canada has traditionally been seen as a symbol of social and economic achievement. Therefore, people who rented were assumed to be low-income or at least just starting out in life. We now know that account was never entirely accurate. And it’s drifted further and further away from the truth. Because of the high cost of living in major cities, a sizable annual income is required to qualify for a lease. Zumper, an apartment search website, reports that the median cost of a two-bedroom in Vancouver is $3,500 per month, meaning that landlords in the city are looking for tenants who can afford to spend no more than 35% of their income on rent. The median rent in Toronto is only $2,950 per month, making it only slightly more affordable. The cost is roughly $2,000 even in Montreal, which has traditionally had a more renter culture. The rental market is already saturated in both Vancouver and Montreal. The majority of Torontonians (around 50%) are renters. Now that there are five million renting households in the United States (up from 4.1 million a decade ago), the issue of rent control is more contentious than ever. Even though there are twice as many home-owning households, renters currently have the upper hand. These people should be treated with the same respect and consideration as everyone else. While this change will not happen overnight, there are steps that may be taken in the correct direction. Ten years after Canadians were allowed to use their mortgage payments to bolster their credit score, many renters still don’t have access to this option. Equifax began partnering with the Landlord Credit Bureau in 2020, allowing for rent payments to be factored into credit scores. However, renters in Quebec are out of luck and those who use Equifax’s main competitor, TransUnion, are out of luck as well. If you make your largest monthly payment on time, month after month, it’s possible that a credit reporting agency will ignore your payment history. This makes no sense. Even if you pay your rent on time every month, you can still lose your home. Landlords in some places can evict renters to move in with their own families. A landlord who wants to increase the rent and find a new tenant could take advantage of this condition. Furthermore, owner-use evictions are on the rise. The Tenant Resource and Advisory Centre in British Columbia reports that 36.3% of eviction-related calls this year are linked to owner use, up from 31.62% in 2020/2021. Tenants should be protected against unlawful eviction by stricter laws. The province of British Columbia is attempting to put a stop to this practise by enacting a provision last year that allows for a fine equal to one year’s rent, payable to the renter, though enforcing this law has proven difficult. Ottawa has increased its annual immigration quota to roughly 500,000. The majority will settle in the country’s urban areas, which will be unable to expand outward to accommodate them. Toronto Mayor John Tory is trying to do this with a housing plan that permits for tiny multi-unit structures everywhere to increase density. It’s also important to put more effort into the rental housing market. Protecting renters will require action from provincial and local authorities. And the rest of us will have to reevaluate how we view renters.

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What does pre-construction assignment sale mean?

Blogs / Amy / 26 December 2022 / assignment, assignmentsale, Condos, condosale, homebuyer, homeowner, pre-construction, preconstructionhome

What does pre-construction assignment sale mean? A pre-construction assignment sale occurs when a unit’s initial buyer sells their contract to a new bidder before the original buyer takes ownership of the property. Smith makes the choice to purchase a pre-construction property in Toronto. In light of the fact that neither the building nor the registration for it exists at the time of the signing of the Agreement of Purchase and Sale, what he is actually purchasing is the contract for his new home. Smith buys a one-bedroom condo in a new 25-story building that is still under construction. The project is expected to be finished in four years. The developer has included in the Agreement of Purchase and Sale that can sell or transfer the contract for the pre-construction one-bedroom flat to a new buyer before he is required to take possession. Smith meets the woman of his dreams during those four years, and the two of them go on to start a family. He suddenly realised that he doesn’t require the one-bedroom condo in the new condo complex. So, now what? He can also find a new buyer for his condo unit and transfer the contract to them before he moves in. A pre-construction assignment sale is exactly what it sounds like. Smith, the original buyer of the pre-construction contract, is selling it and will find a new buyer, Jane Doe, to buy it from him. All costs and legal obligations associated with the pre-construction one-bedroom condo previously described are now the responsibility of Jane Doe as the new owner. Smith and Jane Doe should consult a real estate agent and a lawyer who is experienced in real estate transactions to help them through the process. Now that the closing costs have been eliminated, Smith will save thousands of dollars, and may even be able to turn a profit on the sale. However, in order for this transaction to go through, Smith will need to pay a small fee back to the developer, as detailed in the Agreement of Purchase and Sale. And with that, Jane Doe has become the legal owner of the pre-construction condo unit of her dreams, a one-bedroom unit that has never been lived in before. More high-rise residential buildings have been built in tandem with the continued population growth in Toronto, the GTA, and the neighbouring municipalities Local real estate markets have been propelled by people buying properties in the pre-construction phase. Most prospective homebuyers are drawn to investment properties because of their lower prices and the chance of building equity before moving in.

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Pre-construction assignment sale is ADVANTAGEOUS

Blogs / Amy / 26 December 2022 / advantage, assignment, assignmentsale, condo, condominium, homesale, newhome, pre-construction, relaestate

PRE-CONSTRUCTION ASSIGNMENT SALE IS ADVANTAGEOUS Things can shift rapidly in life, for better or worse. The Agreement of Purchase and Sale includes a no-assignment clause for the security of both the original purchaser and the developer. It normally takes about four to five years to finish building a condo from the ground up, and even longer for a high-rise complex. These apartments are put up for sale well in advance of when the building really begins. George, a bachelor of 27 years, has a career in the medical sciences. He has worked hard and saved enough money to put a down payment on an apartment in a new downtown Toronto development that will have 30 stories when it is finally finished four years from now. After putting down a down payment and signing the purchase agreement, George is free to carry on with his single life and thriving profession as a proud future homeowner. Imagine that two years from now, George receives a job offer in a different city, meets a wonderful new person, and envisions a bright future with them both. Or perhaps his financial situation has taken a turn for the worse, and he no longer qualifies for a mortgage and desperately needs the pre-construction condo unit. It’s also possible that George is an investor with extensive knowledge of the local real estate market. He invests in pre-construction unit contracts, then, when the time comes, lists the apartments for sale as assignment sales through real estate agents. Due to the length of time, it has taken to complete the building, the value of the land on which it is situated has increased, increasing the worth of the unit beyond the amount paid for the contract. In the few years it takes to construct a condo complex, a lot can happen in anyone’s life and finances, both for the better and for the worse. These are just a few of the many circumstances that frequently lead to an Agreement of Purchase and Sale assignment in the pre-construction building industry and with developers.

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The Legal Process of an Assignment Sale

Blogs / Amy / 24 December 2022 / assignment, assignmentsale, buyer, homebuyer, homesale, legal, legalprocess, newhome, process, sale

The Legal Process of an Assignment Sale Using the assignment clause to buy or sell a pre-construction apartment requires competent legal advice. The services of a lawyer with experience in this field should be sought out. Three years ago, when Stefan bought his two-bedroom-plus-den condo, he worked with a real estate agent and a lawyer who specialised in pre-construction real estate to help him navigate the process, answer his questions, and make sense of the complex legalese contained in his Agreement of Purchase and Sale. Legally, you can sell a property before building has even begun through a process called an assignment, but it’s a bit more involved than a regular selling because there are now (the assignor original buyer, the developer, and the assignee new buyer). Stefan’s condo’s assignment sale clause was included in the Agreement of Purchase and Sale that he signed with the developer. Stefan is now permitted by law to sell the pre-construction contract for the unit to a third party, provided that the new buyer agrees to be bound by the terms and conditions of the Agreement of Purchase and Sale. Yes, the transaction is regarded to be valid if an assignment clause is included in the Agreement of Purchase and Sale and Stefan complies with the terms and conditions specified therein. Although assignment sales are permitted under the law, each pre-construction developer has their own set of rules and regulations that might make each assignment sale different. As the anticipated occupancy date for Stefan’s pre-construction condominium unit approaches, he is considering selling the contract for the apartment. He has decided to engage with the same real estate agent and lawyer to guide him through the assignment sale process and ensure that he complies with all applicable laws and developer regulations. Stefan will need to pay the developer for the assignment sale, which often takes the form of legal and administration fees in order to transfer the contract for the 2-bedroom plus den unit from his name to the new buyer’s name. The Assignment of Purchase and Selling will detail the total price of the pre-construction sale assignment.

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