17 Jan

CMHC Fee Increases and the Impact on the BC Home Partnership Program (down payment loans)

General

Posted by: Adam Hawryluk

Good evening all,

CMHC just announced their mortgage insurance premiums are going up for borrowers across the board as of March 17th, 2017. That means higher costs to consumers, and if you look at the bottom line where it says “90.01% to 95%- Non-Traditional Down Payment”, that’s the category that the new BC Government down payment loan holders will fall under (see the chart below).

So to use the same numbers as my previous blog post on this topic (LINK), on a house purchase of $400,000, you’ve saved $10,000 (2.5%) for a down payment and the governement loans you the other $10,000 (2.5%) you need to make it to a full 5% down payment. As of March 17th 2017 (you need an accepted offer on a house by that date, not just a pre-approval) the CMHC fee on that purchase goes up from $14,630 to $17,100, a difference of $2,470. That’s an extra $11.30 per payment. It’s not a huge amount monthly, but it’s not nothing.

CMHC’s rational is that because of new rules imposed in October by OFSI (the federal regulator of banks and insurers), they need more money in their bank accounts to back the insurance coverage they’re offering. I think that is fair, for them to ensure their butts are covered (especially since they’re a crown corporation and we taxpayers are really on the hook if they fail to do so), but this is frustrating because after the federal government changed the qualifying rules in October of 2016, the Finance Minister Bill Morneau said he wasn’t currently planning to announce any other measures aimed at cooling the market. And yet here we are, with another fan to the market which will fall disproportionately on first time home buyers.

SERENETY NOW!

For more information, don’t hesitate to reach out.

Adam Hawryluk
DLC Canadian Mortgage Experts
250-619-5274
adam@cmexp.com 

4 Jan

UPDATE: More info on BC Home Partnership Program (down payment matching)

General

Posted by: Adam Hawryluk

Alright, so we now have a little more information on this program from the BC Government. We still haven’t heard how each specific lender will use the program, but we expect that information to be released over the next two weeks as we near the January 16th date when they will begin accepting applications. Their website for the program is HERE, with a little more depth HERE, along with a happy video.

A few highlights to point out: 

1. Qualifying – The Government has worded the program as “everyone on title” needs to comply with the rules and regulations (resided in BC for 1 year min, be a First Time Home Buyer, combined income of less than $150k, etc). That means this program won’t work for people with co-signers (mom and/or dad helping you qualify), because if they cosign, they’re going on title. And if they go on title and they’ve owned a place before, you’re no longer eligible. This means parents/family can only be used as guarantors (cosigners are required to bolster income qualification and go on title, guarantors bolster poor or limited credit history and do not go on title). This may be a challenge for many people, because the program doesn’t help with affordabilty of homeownership, it helps with getting that first chunk of change for down payment.

2. The Loan – Is interest free for the first 5 years and after that first 5 years, interest is to be registered at Prime +0.50% (prime today is 2.70%), so 3.20% as of today. The interest rate will be reset at each 5 year period. The down payment loan will also be subject to legal fees, since it is actually registered as a 2nd mortgage on your property. They say they will let you know the cost of those legal fees upon approval of your application to the program.

3. Your lender – The website outlines the various lenders that are acceptable to them (there are tons, your lender most likely is on this list, and any lender we would find for you would be on that list too). Again, we haven’t heard much from lenders yet, but we do know they’ll have to be okay with a 2nd mortgage being registered behind their mortgage, which we still don’t which lenders are okay with that. They also say it is to be interpreted by lenders as a “non-traditional source of down payment”, but only a few lenders will actually allow a non-traditional down payment, and that interpretation means it increases the CMHC fee as well.

For example, purchasing a $400,000 home with 5% down, you save up $10,000 (2.50%) on your own and need a loan for $10,000 (2.50%), ending you with a desired mortgage of $380,000.

Your CMHC fee increases from $13,680 (3.60% of the mortgage amount) to $14,630 (3.85%). An increase of $950 (or $1,285.45 amortized over 20 years at 3.20%). 

So you pay that $10,000 off right after your 5th year with the home, perfect. No interest on the loan (just legal and setup fees as shown above). But if you take the whole 20 years to pay it back, it would mean monthly payments of $56.36 and the total interest would equal $3,526.16 (assuming prime rate stays at 2.70%, which it most likely won’t).

So it is interesting to see these nuggets of information being released, and it is worth noting that this type of program already exists in Newfoundland and Labrador (HERE) as well as in the Yukon (HERE), with variations in each region. I’m looking forward to seeing which lenders choose to opt-in on this program, and their policies. As soon as we have that information, I’ll update this blog. 

If you have any questions or comments, feel free to reach via email at adam@cmexp.com or by phone 250-619-5274.

 

Cheers,
Adam Hawryluk
DLC Canadian Mortgage Experts Tillit Financial                            *OAC, E&O

7 Jul

Separation Agreement

General

Posted by: Adam Hawryluk

What is a Separation Agreement?

A separation agreement is a written record of how a couple has settled issues arising from the end of their relationship. Separation agreements are legal contracts recording the terms of your settlement that can be enforced by the court.  

Why do lenders require a Separation Agreement?

Lenders require a separation agreement to verify that there is a legally binding contract in place.

How can I obtain my Separation Agreement? 

A separation agreement can obtained through your lawyer if you do not already have a copy. 

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

 

27 Jun

Property Disclosure Statement

General

Posted by: Adam Hawryluk

What is a Property Disclosure Statement?

When homeowners list their property for sale, they will be asked to complete a Property Disclosure Statment.  This document will give potential buyers more detailed information about the condition of the property they are viewing. 

What should be included in a Property Disclosure Statement?

The PDS itemizes potential problems such as asbestos insulation, unauthorized rental suites, renovations done without a permit and unregistered easements or encroachments, and includes a wide range of questions such as:

  • Are you aware of any past or present underground oil storage tanks(s) on the premises?
  • Are you aware of any moisture and/or water problems in the walls, basement or crawl space?
  • Are you aware if the premises have been used as a marijuana grow operation or to manufacture illegal drugs?
  • Are you aware if the property, or any portion of the property, is designated or proposed for designation as a “heritage site” or of “heritage value” under the Heritage Conservation Act or under municipal legislation?

There are separate disclosure for residential, strata title properties and rural properties.

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

 

27 Jun

Appraisals

General

Posted by: Adam Hawryluk

What are Appraisals? 

An appraisal is a written document that shows an opinion of how much a property is worth. The appraisal gives you useful information about the property. It describes what makes it valuable and may show how it compares to other properties in the neighborhood. 

Why do lenders require Appraisals? 

When you borrow money to buy or refinance a home, your lender may need to get a new appraisal to verify the stated value of the property. An appraisal helps assure you and your lender that the value of the property is based on facts, not just the seller’s opinion. 

How can I obtain an Appraisal?

If a lender requires an appraisal, we will order the appraisal on your behalf. 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

 

15 Jun

Depreciation Report

General

Posted by: Adam Hawryluk

What is a Depreciation Report?

Depreciation reports help strata corporations, including bare-land strata corporations, plan for the repair, maintenance and replacement of common property, limited common property, and common assets over a 30 year period. The report must contain a physical inventory of the common property and assets, anticipated maintenance, repair and replacement costs for common expenses projected over 30 years, and a financial forecasting section with at least three cash flow funding models.

Why do Lenders require Depreciation Reports?

Depreciation reports officially show the lender any plans or need for repair, maintenance, and replacement in regards to the strata complex. 

How can I obtain a Depreciation Report?

Depreciation reports can be obtained through the strata management company as they should be part of the strata documents.

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

15 Jun

Strata Minutes and AGM

General

Posted by: Adam Hawryluk

What are Strata Minutes? 

The strata council acts as the managing body for the strata corporation. There are certain rules and regulations that each strata council must abide by as set out by the Strata Property Act. One of these rules is to keep minutes from each meeting. These minutes outline past, present, and future concerns with the building. Additionally, strata councils are required by the Strata Property Act to hold an Annual General Meeting. 

Why do Lenders require Strata Minutes?

Lenders require strata minutes to identify any current or upcoming issues with the property. 

How can I obtain Strata Minutes?

Typically, the seller will provide the buyers realtor with the minutes. If there is no realtor on the transaction then the minutes can be asked for from the seller or the strata management company.

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

18 May

Down Payment: tips for getting it right the first time!

General

Posted by: Adam Hawryluk

All lenders require us to provide proof that you have the down payment and closing/legal costs—from your own resources (not borrowed).

Depending on where the down payment is coming from, certain documents are required. This is required to satisfy lender underwriters as well as insurers that you are not borrowing the down payment, which would change our lending ratios—and the funds are not laundered money into real estate.

Acceptable types of Down Payment Sources

Chequing/Savings Accounts

  • Provide a 3-month history of bank statements

  • -The statements must have your name clearly indicated on them—or your account number, together with something that links your account number to your name, such as a void cheque from that account—internet statements are fine as long as we can prove ownership of the account number as most don’t have a name printed on them

  • -From larger deposits (greater than $1,000) that are not pay cheques—we need to provide proof of where they came from. For example:

    • -If you deposited a tax refund, we need the tax return—or Notice of Assessment—or ideally, a copy of the tax refund cheque

    • -If you transferred money over from a savings or investment account, we need to show 90 days savings or investment account history and the transfer our to this bank account

RRSP or Investments

  • -Provide a current statement of balance

  • -Provide the most recent quarterly statement, so combined we are showing the 90-day history

Gifted Down Payment

  • -Provide a standard form gift letter

  • -Provide a bank statement in your name, showing the matching gift amount being deposited into your account

  • -Provide confirmation of the funds from the giftor’s account by way of statement  

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.
3 May

What Can You Expect During the Mortgage Process?

General

Posted by: Adam Hawryluk

Obtaining a mortgage comes at a time of immense stress and sometimes even confusion. Our goal here is to lay out the process to be taken during the mortgage process.  We have constructed a 6 step plan that will hopefully make the time of planning and obtaining your mortgage surprise free. 

1. Introduction:

Introductions are a very important part of my business as a vast majority of my clients are brought to me through word of mouth.  Through my commitment to providing my clients with an exceptional and professional experience, they are comfortable in their decision to mention me to their friends and family members.  I hope that by the end of our time together, you feel the same way as the individual who referred you. 

2. Exploratory Meeting:

This is an opportunity to discuss any concerns, questions, and fears you may have about the process of obtaining your mortgage.  Some areas of discussion may include: CMHC fees, down payment, debt servicing, credit score, and appraisals.  At this time, it may be beneficial for you to bring the following documents: 2 years of NOAs and your current mortgage statement (if applicable).  By bringing in these documents to our first meeting, we are able to expedite this process and get your application started.

3. Explanation and Signing:

Once all required documentation has been obtained, we will be able to submit your mortgage request to a lender.  It is once we have received an approval that we will either meet or electronically send you your mortgage commitment and documents to be signed. Just like at any time during this process, feel free to ask any questions you may have. And remember, just because you are approved for a mortgage does not mean you are obligated to accept it.  If a part of your deal falls through, or you are no longer needing financing for your home, you are in no way bound to the commitment until it is registered by your solicitor. 

4. File Complete:

Your file will be marked complete when all documents required by the lender are fulfilled and all documentation has been signed. When we have received final approval from the lender, we will contact both you and your realtor regarding the completion as well as instruct your lawyer for them to complete their final steps. 

5. Instruction of Lawyer/Notary:

Your lawyer will be the final piece of finalizing your mortgage as well as your home purchase.  Your lawyer will receive documents from your realtor, lender, and myself. They will then compile the legal documents necessary to ensure the completion contains all necessary elements of a legal contract. The signing of these documents is usually completed shortly before the closing date of your property. It is here where the funds for down payment, property transfer tax, title insurance, etcetera will be requested by your solicitor to be brought to this meeting, typically via a certified cheque. 

6. Closing:

Your closing date is a very exciting time as it marks the transfer of ownership from the previous owner to you. It also marks the end of endless documents needing to be signed and the beginning of home ownership! 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.

 

15 Apr

Contract of Purchase and Sale

General

Posted by: Adam Hawryluk

What is a Contract of Purchase and Sale?

The contract of purchase and sale is an agreement that a buyer and a seller sign when going through a property sale transaction.  This document outlines the terms and conditions the buyer and seller promise to abide by when the property is sold.

 What should be included in a Contract of Purchase and Sale?

Some of the most important terms deal with the property purchase price, terms of payment, how the buyer will receive the property, what property features are included in the price, and title clearance. Since signing this agreement is a crucial step in purchasing/selling a property, a lawyer can be of great help in ensuring the agreement is properly drafted.

 

The information and services offered on this Site are provided with the understanding that neither Dominion Lending Centres Inc., nor its suppliers or users are engaged in rendering legal or other professional services or advice. Although we strive for accuracy, timeliness and completeness, information quoted is not guaranteed and may change at any time and the information you obtain at this site is not, nor is it intended to be, legal advice.  If you require specific advice regarding your own situation please contact me for consultation.