Blog

What to Look for When Investing in Real Estate

  Real estate is one of the most popular forms of investment. People who purchase property often see it as an easy way to make a lot of money but that is a common misconception. Buying real estate is far more complex and should be thoroughly researched before monies are exchanged and contracts signed. While there is great potential to earn a profit, property investments are also a risky undertaking that should not be entered into without careful thought and planning.      Investment property is defined as residential, commercial or industrial real estate that is purchased for the purpose of making a profit. Gains can be made through rental income, resale equity, or both. The purchase can include land purchases with the intention of constructing buildings on it, derelict buildings that will be torn down to make way for new properties, and pre-existing structures that range from being in good condition, to fixer uppers, or somewhere in between.  Regardless of what or why buyers are considering the investment, buying realty property has its rewards but it also has its risks. Investing in property is not a short term or quick money-making venture. It is a long term financial undertaking that does not always reap immediate rewards. If you are considering any investment in residential, commercial, or industry realty, it is important to do your research first and create an investment plan. Before looking at real estate listings, you should know how much money you will need up front, what the operating and maintenance costs will be, the short and long term earning potential, and other income and expense commitments you will responsible for. If you are investing in property in another province or country, it is even more important to really look at your location and market before buying the place so you know exactly what you are getting into. Once you have a clear understanding of everything involved in real estate investing and you have the money saved to make an investment, you can start shopping. If you are new to the property investment industry, here are some things to look for when investing in real estate:   

Type of Property

    Investment real estate comes in several forms including land purchases, residential properties, commercial structures, and industrial spaces. Before shopping for your first investment, first choose what type of property you want to buy your reasons for choosing the space first. Knowing what kind of real estate you will be focusing on will help with the short and long term planning.  

Location

    After you have decided on the type of property, it is time to look at the location of the place. A good location has a higher earnings potential, but a poorly situated lot is much riskier and will be more challenging to rent or resell. Whether you are buying real estate in your geographical area or outside your region or country, do your research first to see if the location is a good fit for the type and size of building you will be buying.

Price

  Real estate is not a cheap venture so investors must have money first before they can enter the realty investing market. Investment property also has more restrictions, licensing requirements, regulations, and higher tax fees that do not apply to personal purchases. Before bidding on investment property, buyers must have a substantial down payment saved and the financial means to cover the maintenance and operating costs up front.  Therefore, before viewing any investment properties, it is important that you thoroughly analyse your budget first to make sure you can afford the lot.  

Short and Long Term Demands

  Real estate property is not a short term investment and should not be looked at as quick money maker. It is a long term venture that you could own for several years. Therefore, it is essential to consider the short and long term demands of the space you are looking at before buying the real estate. What might look like a good property investment now might not be a profitable space in a few years. Regardless of the type of investment property you are considering, do your research before buying the land to ensure it will meet your immediate and future money making goals.  

After Purchase Expenses

    There are many expenses to consider after you have purchased the property including operational bills, maintenance expenses, taxes, and repair bills.  These expenditures can range greatly in price depending on the type of building or acreage you have purchased. When viewing a listing and planning your next step, examine all the expenses you will be responsible for after you purchase the property. Buyers who fail to clearly examine all their expenses can quickly find themselves in a financially perilous position that they cannot afford.   

Profit Potential

People buy real estate with the intention of making a profit.  When you are looking for investment real estate, it is important to include in your research what the earnings potential could be after all the expenses have been covered. Once you have done the math, you will know if it is a good investment or not.  

Rate of Return

    Many people have the misconception that investing in real estate is guaranteed to inflate their bank accounts with high residual earnings. While the potential is there to make a lot of money on your investment property, there is also a risk that you could lose a considerable amount of money as well. Part of the profit potential planning includes your rate of return calculations. Before bidding on a listed property, calculate your monthly income and expenses to find out what your rate of return will be in the immediate and future timelines. Initially your rate of return (RoR) will be low, but that should improve over time. If the RoR looks bleak in the short and long term planning goals, you will have to decide if the property is worth buying.  

Tax Benefits and Breaks

    Whether you are looking at investing locally or buying property in another province or country, there are different tax obligations and breaks that you should be aware of first. When looking for the best real estate investment property investigate what tax benefits you are entitled to and the obligations you will be responsible for. Real estate investing is expensive, challenging, exciting, and rewarding. Whether you are buying a vacant lot, a residential rental unit, commercial buildings, or an industrial lot, there are numerous risks and benefits to consider. Understanding the market from a business standpoint, thoroughly researching your venture, and clearly outlining your investment plan before looking at current real estate listings will help you find the right investment property for your short and long term goals.  

What Impacts Will The New Marijuana Laws In Canada Have On Real Estate?

Image result for marijuana laws and real estate Cannabis has been legal in Canada for just over three months now. Even before Bill C-45, The Cannabis Act became law, many homeowners and real estate agents expressed concerns about the impact it would have on their home value. In fact, in a recent survey by Zoocasa, most Canadians polled felt that growing and using marijuana in a home will lower the value of the property. While each province and territory have developed their own policies regarding growing and using pot in public and private places, many questions and concerns still remain in about the impacts of cannabis in the real estate industry. To date, people are now legally allowed to use marijuana in their own homes. Restrictions about public usage varies from province and territory. While most regions have set restrictive guidelines on where people can smoke pot in public, Manitoba and Saskatchewan are currently the only two provinces that do not allow consumption of cannabis in any public area. Landlords and rental companies are also setting strict guidelines with many banning any use or plant cultivation in their rental units completely. Since Bill C-45 became law, the majority of home buyers, sellers, realty agents, landlords believe that marijuana will have a negative impact on the housing market. The main issues questioned included:

Pot Usage

 

 

While it is too soon to tell how cannabis usage will affect your property value, early surveys have shown that the majority of Canadians believe using pot in the comfort of your own home will adversely affect the home’s value. Of the Canadians asked, 64% felt smoking marijuana in your home would lower the total value while only 21% felt that home usage would not affect the realty valuation. The remaining people polled were neutral. The numbers differed slightly among those renting property. Forty-six percent of renters felt that marijuana use in the home would decrease its value while 33% felt that pot usage would not affect the rental property valuation in Canada.

Growing Marijuana Plants

Under the new law, Canadians can grow up to four plants in their home in most provinces and territories. When Canadians were asked whether or not they felt growing cannabis plants would affect the resale value of their property, the results depended greatly on the age of the person surveyed. Millennials were more lenient with their views. Only 38% felt growing plants inside the property would reduce its value. Baby boomers and Gen-X populations had far different views. Fifty-eight percent of the Generation X population and 59% of the boomers felt that home plant growth would lower their property value. Over half of the people surveyed (52%) would not consider buying a home if they knew pot plants had been cultivated in the property. Many potential home buyers are considered about the short and long term issues they will face buying a home that has been used to produce cannabis. Buying a home that has been used as a grow op can be costly to repair.

Insurance Coverage

Since Marijuana became legal in Canada, many insurance companies have added exclusion clauses in their policies to protect themselves from the cost of covering damage caused by using and growing marijuana. The smoke and odour from pot use can linger in homes and furnishings and cause health problems for new owners. Cleaning the interior of the place to eliminate the residue is pricey and not covered by house insurance. Growing plants in homes is also very risky. People who cultivate cannabis in their home are 24% more likely to have a house fire. There is also a greater chance the property will have electrical damage, moisture build-up, and mould issues. Growers are also at a higher risk of being burglarized. Most insurance companies are refusing to cover the costs of these damages if they are caused by pot usage. Before you buy or selling a home or condo, it is important to check with your insurance company and real estate agent first before you finalize the deal to make sure you are covered if damages occur to your home.

Cannabis Stores and Home Values

While it varies from territory to territory, all provinces are allowing pot shops to open in their cities. Despite the provincial and federal governments acceptance of marijuana stores, most Canadians surveyed expressed concerns about having a dispensary in their neighbourhood. Most felt that opening a pot shop in their community would lower their property values. Of the 1300 plus people surveyed, 42% felt that having a cannabis shop in their area would negatively impact their property’s value while 48% said having a dispensary in a neighbourhood would discourage them from purchasing a home. Now that Cannabis is legal in Canada, many political parties, industry leaders, and private sector consumers are left to deal with the impact that this new law will have on their personal and professional development. The real estate market is just one area seeing the adversity from this new law. Although Bill C-45 is still a relatively new law, many Canadians believe that the production, cultivation, and commercial sale of Marijuana will have a negative impacts on buying, selling, and renting residential properties. Home owners and real estate agents have many questions and concerns about the short and long term affects that cannabis legalization will have on the housing market. If you are considering buying or selling your home, it is important to talk to your real estate agent first about the Cannabis Act and how it will affect your property value.  

Reasons to Buy or Sell Real Estate in Winter

Now that the holidays are over, it is time to think ahead to the upcoming months. Many people are already planning on buying or selling a house in the new year. But while most realty prospects are looking ahead to the warmer, spring season to start their home shopping, winter should not be excluded from their house hunting plans. snow on house Like most industries, the real estate market goes through its peaks and lulls throughout the year. Spring and summer are unquestionably the busiest times. The majority of homeowners start listing their houses after the snow melts while cabin fevered shoppers are eager to get out and start looking for their next real estate investment. The best buy times are not always during the peak seasons. In fact, winter is a great, often overlooked time of year to think about buying or selling a house. For those seriously considering buying or selling property, there are many benefits to looking for your home during the winter months including:

Less Competition

cart racing There are far less competition right now, increasing your chances of getting the home you really want.  Fewer homeowners are selling a house during the cold time of year and equally fewer people are actively looking to buy a home. This is great for both buyers and sellers. Sellers do not have work as hard to make their home stand out among the other listings. Sellers have a better chance of getting their dream home without the worry of being outbid or overspending in a bidding war.

Realtors Work Harder for Their Clients

for sale sign Because the market typically slows during the cold time of year, real estate agents have a lot more time to spend with each client. Regardless whether their clients are buying or selling a house In the winter, your agent will work much harder to get you what you want. Realtors want the property sale just as much as the client so they will go the extra mile to see that your home is sold. Agents also put more effort into finding the right home for the eager buyer.

Competitive Pricing

value and price Right now it is a buyers market. Homes do not sell as quickly during the slow, colder season, so house hunters have a lot more negotiating power. They can offer a lower sold house price that meets their budget.  With fewer listings and clients actively looking, sellers must offer a fair and competitive price if they want to sell their home.

Serious Buyers and Sellers

moving day Summer is usually viewed as the best time to buy or sell a house because there are a lot more people on the market. However, despite the volume, many are window shoppers; they are more curious to see what is available and less interested in actually bidding on a property. Equally, there are plenty of homeowners that like test the waters to see if they can get a good offer on their property. During the winter season, both buyers and sellers are more serious in their intent.  Buyers list their property because they genuinely want or have to sell their home. Sellers want to buy home and look at listings with the intent of putting a bid on the property if it meets their needs.

Less Yard Work

digging in dirt During the growing season, homeowners must spend a considerable amount of time and money tending to the landscape and exterior of their homes to make them look as attractive as possible for potential buyers. However, at this time of year, the blanket of snow hides all the ground underneath so property owners have far less outdoor work to worry about.

Rising Interest Rates

raising interest rate The Bank of Canada(BoC) announced last year that they would be steadily raising interest rates to bring them to a more neutral range over the next couple of years. During the last 15 months, the rates have increased five consecutive times and the BoC has stated that they will continue to climb in the foreseeable future.  It is expected that the rates will increase anywhere between 2.50% to 3.50%.  While these numbers might not sound high, when it comes to buying real estate, the higher rates can easily add hundreds, even thousands of dollars more to your home’s price. For already indebted homeowners, these rate hikes will affect make it more difficult to buy a home and pay a mortgage. The rising interest rates will also have an effect on sold house prices. Some sellers could lose money on their investment well they sell their house. Knowing that the rates are only going to increase, now is the best time to buy a house. Securing a mortgage will only get harder as we head into the busier real estate season.

Regulations are Tightening

tight regulations To protect debt riddled Canadians from overspending on their real estate, provincial and federal government bodies have developed legislation to protect candidates when buying or selling property. These polices have made it more difficult for some home shoppers to buy their first home.  Buyers must now have more of a down payment saved before they can apply for a mortgage. Cautious banking institutes are also taking more precautions and establishing stricter guidelines for approving home loans. It is becoming more difficult for new home buyers to save enough money and get a mortgage. As the year progresses, it will become even more difficult to purchase property, especially for first time buyers.  Listing prices are often higher during the peak season and, with more people looking, there is less room to negotiate. Many house shoppers will not have the savings to put down on their dream home when the market is at its busiest. Buying or selling a house is never an easy, or quick process. Because it is one the biggest investments you will ever make, lot of planning, preparation, time, and saving must go into your venture. In the next few months, there will be a lot of for sale signs popping up as the industry gets ready for their busy spring and summer seasons. But for serious real estate investors, winter is one of the best buy times that is often overlooked. This slower, colder season offers greater opportunities to get the house you want at a price you can afford.

CAUTION: Safety Tips for Realtors

Realtors are one of the most vulnerable professionals. Agents work long hours, often well into the dark evening hours and are alone with strangers in vacant properties on a regular basis. While there are no stats on how many real estate agents are assaulted or killed every year in Canada, what is known is that violence against realty specialists is on the rise. As a real estate agent, you must incorporate strategies into your daily duties to ensure that you are safe in every environment. Whether it is meeting with a potential seller, showing buyers listed properties, or advertising your services, your personal safety must always be considered. Here are some of the most effective safety tips you should use while doing your job.

Meet Potential Clients in Public Places

Realtor Safety Tips: Meet in Public Places Your first meeting with any new client should always be in a public place. Invite them to your office for the initial consultation. If you have a home office, schedule your meeting at a popular coffee shop in a central area. For your own personal safety as well as the wellbeing of your family, never invite someone to your home.

Keep Files On Every Client

As part of your ongoing safety measures, it is important to create a hard file on every client. If something happens, the information you collect will make it easier to identify the person. Your records should include a personal information sheet that each client fills out during their initial consultation. There are many forms you can download online or you can create your own. It should also include copies of their government issued photo ID. Once you no longer need the clientele’s personal data, it is important to destroy the documents to keep their privacy safe.

Book Daytime Showings

Realtor Safety Tips: Daytime Bookings Although it is not always feasible, try to book most of your showings during the day. It is easier to see when the sun is out. If you must book after sunset, take extra safety precautions to make sure the entire home and area is well lit and all curtains are open before showing the home.

Follow the Ten Second Rule

As soon as you arrive for a scheduled appointment, use the ten second rule to assess the area for any safety issues. Spend ten seconds while sitting in your car to look at the home, the yard, fencing, garage, street, and neighbourhood. Once you step out of your car, take another ten seconds to look around to see who is in the area and take pictures if you feel you need to.  As you are approaching the property, use the same time span to look for issues in and around the property such as animals, people, and household hazards. When you first enter the building, spend your time looking for anything that could be a safety concern.

Follow Your Instincts ALWAYS

In many reported situations of violence against a realtor, the agent stated that they instinctively felt uncomfortable around their client before their meeting. These silent signals should never be ignored. If your gut feeling is telling you that the situation is not safe, follow your instincts ALWAYS. You have the right to cancel a scheduled appointment.

Vehicle Safety

As a regular practice, never share a vehicle with a client.  Arrive at the destination in separate vehicles, even if you will be showing the clientele multiple listings.  Park your vehicle in well lit areas on the street or somewhere where you cannot be blocked from leaving. While in the car, your doors should be locked at all times so no one can get into your vehicle. Keep your keys on you and easily accessible so you can quickly get to them if you need to.

Let Others Know Where You Are

When showing listings, as a safety precaution, someone should always know your whereabouts. Before going to any appointment make sure you let someone know where you are, who you are with, and what time your meeting is scheduled to begin and end. You can  give your schedule to a friend, family member, or colleague.

Use a Safe Word

Having a safe word is also important. Safe words are code that that are designed to alert your contacts that you danger without directly saying so in front of your client. For example, saying phrases like “I need the blue file”, I forgot my red jacket”, or “can you get my silver travel mug” are examples of safety phrases.

Stay Safe With Your Phone

Your cell phone is a great tool to help you stay safe. Most personal handheld devices have an emergency contact setup on the lock screen that you can access quickly if needed.  There are also different apps available to help realtors stay safe in isolated situations. PROtect is one app that is designed for real estate agents. This user-friendly application protects you by letting your designed circle of contacts know when you are in situations where your safety might be jeopardized. Once you have uploaded your contacts, you can set a timer for each appointment or preschedule your calendar meetings in the program. Once the timer goes off, you can notify your contacts that you are safe. If they do not hear from you, they will know something is wrong. The app also has a special help button feature where you can bypass the timer to alert your circle that you need immediate assistance. There are other apps available to help protect you from dangerous situations including Autumn Alert, Musketeer Safe, Gethomesafe, iWitness, Roar, and Feelsafe. Most are free and available on all apple and smart phone devices. Finding the right system for you will help ensure your safety during potential hazardous appointments.

Let The Client Lead

Stay safe when a client shows up to view a place by letting them lead the way. Walk behind them when touring a place and guide them to different areas using hand gestures. Never go into an area where you will be blocked in or cannot see properly. Clients can look at attics, lofts, and basements on their own.

Staying Safe During Open Houses

Open houses are popular events when selling a home. However, real estate agents have less control of who walks into the premises during the scheduled event. During the open house ask another realtor, your assistant, a friend, or family member to stay at the property with you. Having a buddy system will protect you from potentially dangerous moments. Prior to the showing, make sure the owner removes all potential hazards including sharp objects, personals photos and documents, pharmaceuticals, money, jewelry, technology, and other personal valuables. This will not only protect your client but the realtors from danger as well. After the open house or showing, always check all rooms and areas of the place first to make sure no one is still on the premises.

Take A Self Defense Course

Sometimes, despite all the precautions you take, there might be times when your safety and wellbeing are still at risk. Taking a self defense course can help you defend yourself until you can escape the situation. Many martial arts organizations, community centers and local schools hold self defense training programs.

Protect Yourself Online

Criminals use the internet frequently to find their victims. As real estate agents, you are at risk for identity theft, online scams, and letting would be predators know your whereabouts. Always use care when posting your own personal data and scheduled showings online. Some agents do not use their image on their promotional materials or website. Protect all your passwords, PINs, login information and personal accounts privately secured so they are not easily accessible to would be hackers. Because online scams are becoming more prevalent, it is important to stay on top of the latest online assaults. Equifax and other secure financial tracking companies offer services to protect your financial data and identity from fraud and theft.

Use Other Personal Safety Devices

There are different safety devices you can use to help protect yourself from harm. Whistles are simple and effective tools that can alert people in your immediate area that something is wrong. Body and dash cameras are becoming more common tools used by real estate professionals to ensure their wellbeing. A NIMB ring is another great accessory for realtors. This attractive piece of technologically designed jewelry has a panic button that can quickly alert first responders that you need immediate help and where you are. Having this or other stay safe tools will help protect you while you are on the job. As real estate agents, you face many unique hazards in your profession. To protect yourself from the increasing criminal activity, it is important to incorporate practices and tools into your daily duties so you can stay safe at all times and in every situation. 

What the Interest Rate Increase Means to You

On October 24th, the Bank of Canada, BoC, raised its interest rates from 1. 5 percent to 1.75 percent. While this latest increase was expected, it has still left financial experts feeling anxious about the current and future state of the housing market. This increase is the highest rate jump since December 2008 and the fifth increase in the last 15 months.   Policy makers continue to defend the increasing interest rates saying that the hikes are necessary in order to keep inflation close and the economy strong but that is of little comfort to those working in the real estate market. Many realtors are worried that the higher interest rates will have severe and long lasting effects on the current housing market. They are even more apprehensive about the effects these continued rate hikes will have on first time home buyers. Along with the ongoing increases, financial and realty experts are also leery about the wording that the BoC has been using, or rather, not using in their latest statements. In previous releases, the BoC has stated that interest must be raised gradually in order to keep the borrowing rates close. However, they have recently removed the word “gradual” from their statements, leaving many to believe that the increases are going to happen at a much faster rate than initially expected. While the increases might seem small to the average borrower, the fact is that even the smallest increase can quickly add almost $400.00 more to your monthly household bills. Currently, more than half of all Canadians are living with excessively high debt levels. Raising bank rates could put many mortgage holders in a debt bracket that far exceeds their income. For those who are already struggling each month to pay their bills, these continued increases are likely to cause severe and long lasting financial damage that many might never recover from. For new home buyers, the outlook is even bleaker.  As the rates continue to climb, it is only going to become even more difficult to buy a home. Every time the rates increase by even a mere one percent, the affordability rates for first time home buyers decreases by a staggering six percent. That is six times faster than the interest rate increases. With stricter changes being enforced by legislation in relation to down payments and mortgage calculation policies for new home owners, the rising interest rates will soon squeeze most first time house hunters out of the real estate market completely.  So, if you are considering buying your first home in the next few years, you need to consider your options sooner rather than later if you hope to own real estate. For many first time shoppers, if they do not act now, their chance of owning a home will soon become the impossible dream. First time house buyers today must have a large down payment of at least five percent or more of the value of the home saved first before they will even be considered for a loan. That means that for a $300,000.00 home, a first time buyer must have a minimum of $15,000.00 saved for a minimal down payment. This does not include all the other legal and personal expenses that are part of buying a house. Because most Canadians today are living with excessively high debt, saving money has become more challenging. As the interest rates continue to spike, the prospects of buying a first house will become  even less unlikely for most Canadian hopefuls. How will the interest rate increase impact first time home buyers? To put this into perspective, using a purchase price of $400,000 and 5% down payment, the mortgage amount would be $395,200, including the Default Insurance Premium with a fixed five year fixed rate of 3.49%. At 25 year amortization, the payment would be $1.973.00 per month. As the BoC’s interest rates continue to increase, the monthly and term increases over the next two years would be: 2019: 4.5% – $2,187.00/ month = $214.00 monthly increase and $12,840.00 term increase 2020: 5.5% – $2,412.00/ month = $225.00 monthly increase and $13,500.00 term increase With most Canadians living with high levels of personal and household debt, these steadily increasing bank rates are starting to worry many homeowners. Since June of this year, the BoC has raised their rates by a total of six percent. That means that nearly one third of all Canadian home owners are now living with the very real fear that further increases will push them to the brink of bankruptcy. These increases are even more perilous for first time home buyers because their higher debt loads are making it almost impossible to save the money for a down payment while soaring housing markets are keeping prices higher than most first timers can realistically afford. As the interest rates continue to rise, the gap between dream and reality will grow even wider for novice house hunters.   The BoC will be releasing their next quarterly report in December and their full report in January 2019. Experts are predicting that the BoC will raise their interest rates by another two percent before the end of the year. For new home owners, and those already struggling to pay their monthly debt, this hike will have catastrophic effects. Serious first time home hunters must act fast if they hope to own their own property. They must establish a clear and viable financial plan to ensure that they will be able to afford their first home now and in the long term. The instability of the market during the first half of 2018 has added to the concerns of many financial experts and institutions. Stalled trade negotiations between Mexico, the US, and Canada spiked prices and put some industries on very shaky grounds. While the USMCA has finally been signed, stabilizing trade between the three North American countries, ongoing tensions between China, and European countries with the US is affecting prices here as well. Add other global instabilities and economic uncertainties and most Canadians are walking a very fine line when it comes to their home buying options. As the prices for products and services continue to skyrocket, so too do the prices for homes in most major cities. For first time shoppers, the prospects are even more treacherous because most people new to the real estate market do not have enough savings or assets to take on a huge financial obligation. Already, nearly one third of home buying hopefuls are being priced out of the inflated housing market. Bank of Canada Interest Increase For the last 15 months, the BoC has been steadily increasing their lending rates and all predictions indicate that the rates will continue to escalate more quickly than most experts initially predicted. The recent omission of the word “gradual” in the BoC reports has many experts worried that the increases are going to happen much faster than initially believed. For debt heavy Canadians, these rate increases are putting almost half of all homeowners into a financially perilous position. For first time home buyers, the risks are even higher. Most debt riddled prospects are already struggling to save the five percent down payment. Adding escalating interest rates will only make it more difficult for house hunters to buy their first home. Knowing that this trend will be continuing in the long term, those wanting to buy their first house need to act now if they want to see their dream of home ownership become a reality.

Comparing Apples to Oranges?

When it comes to mortgages, interest rates are often the first concern. Although the rate is an important piece of the mortgage package, more people should be concerned about the options and penalties that are associated with the mortgage they choose. Not all lenders offer the same thing. With the increasing number of lenders, it is important to understand what differentiates them and their offerings.  Some lenders will offer you great rates and put limitations on your mortgage, while others will offer you great options but limit your discounts on the rate.  It is up to your mortgage professional to educate you on what they offer, and it is up to you to educate yourself on how it may affect you and your financial future.

collateral charge

  A mortgage product you need to familiarize yourself with is a ‘collateral charge’.  A collateral charge is a program where the bank can help you access equity as it builds in your property.  This can be used as a great tool, but it can also put a stranglehold on your ability to switch out of the mortgage at renewal, or before renewal if a better or different option comes along.  It is a wonderful product for the bank, but may not be the best for you moving forward.  This is a great example of why you need an experienced professional to help navigate you through your mortgage options.  

low rate deals

‘Low rate deals’ are something you need to be aware of.  More often than not, you get what you pay for.  A lot of low rate deals will get you amazing rates, but you may have to sacrifice payment frequency, ability to make extra payments, or incur a large penalty if you choose to move or payout your current mortgage before the term is up. A mortgage is not just a mortgage and all lenders are not the same. There are a lot of different ways to structure a mortgage to maximize principal payments, reduce interest cost and develop a program to grow your real estate portfolio.

 

Some helpful questions to ask your mortgage professional…

  • Can I make extra payments?  If so, how often and how much?
  • What is my penalty going to be if I pay my mortgage off before my term has ended?  
  • (Ensure that they know the difference between the standard options – three months interest penalty or interest rate differential – and which one applies to your mortgage)
  • Is my mortgage portable?  Can I move it to a new property if I move?

 

Don’t be afraid to ask the questions.

The answers may save you thousands of dollars!  

If you have any questions, please feel free to contact      Andrew Young

 http://www.communitymortgagemovement.com/