Attention, Hamilton! A record number of home sales occurred last month for the month of March.
Per the REALTORS Association of Hamilton-Burlington, there were 1,803 homes sold through the Association’s Multiple Listing Service last month. This was an all-time high for the month of March in the area, passing the old record holder (March 2016) by 22%.
As a Hamilton mortgage broker, monitoring market statistics and trends is something that I take a lot of pride in doing because it allows me to be as prepared as possible for when clients are ready to buy a home.
When looking at the Hamilton area alone, home sales jumped by 21.5% year-over-year, going from 781 to 949 units for residential homes.
These statistics include the entire city of Hamilton as well as Ancaster, Dundas, Waterdown, Flamborough, Stoney Creek and Glanbrook.
With the area experiencing a supply shortage, it was nice to see 19% increase in the number of listings year-over-year. However, homes still sold at a rapid pace, as end of month inventory nosedived by 38% to just 553 units.
For all residential homes, the average sale price in March 2017 was $516,008, up 28% from March 2016 when the average price was $403,644. Additionally, homes sold five days quicker on average last month when compared to the same month last year.
Flamborough led the way for in the average sale price in the Hamilton area with an average sale price of $875,930 while Hamilton Mountain was at the front of the pack in terms of sales, with 207 units sold. On the other end of the spectrum, the most affordable area was Dunnville with an average selling price of $278,569 in March 2017.
According to the RAHB CEO, March 2017 was the sixth consecutive month that there had been a new record for monthly sales. However, the big concern still lies with the amount of supply available and how we are going to be able to find ways for it to meet demand.
As we push deeper into the Spring market, monitoring the gap between supply and demand will be key to how the rest of the real estate market will perform.
If you’re looking at buying or selling a home in the area, contact a mortgage Hamilton professional, like me, to get the resources you need to be successful in such a competitive market.
In today’s world, most of the people buying who are buying a home are Millennials. In fact, 77% of first-time home buyers in Canada were born between 1980 and 1995!
This means that they are purchasing a home for the very first time, which also means that they likely don’t have any idea of how the buying process works. If you fall into this category, have no fear! While the idea of committing to a home purchase may seem intimidating, a Hamilton mortgage professional like myself will make sure you get through the process as smooth as possible.
If you’re a first-time home buyer, consider these three tips to help your purchase:
- Get a mortgage pre-approval
Millennials are generally known for being procrastinators. However, when it comes to buying a home, I cannot stress how important it is to be prepared ahead of time.
Before you start looking for a home, make sure you visit a mortgage broker to get pre-approved for a mortgage. After all, what’s the sense of wasting your time looking for a home if at the end of it you aren’t able to secure a mortgage?
Getting pre-approved will show sellers that you’re serious about buying, and it also allows for you to put an offer on the house you want right away. Additionally, you will have a good idea of what price range you should be looking in if you’ve already been approved for a specific Hamilton mortgage.
- Know what you want
Entering the homebuying process without a clue of what you and/or your partner are looking for in a home is a recipe for disaster.
Before you go out looking at homes, make a list of everything you want in a home and prioritize them. This way, you know what homes to look at and not to look at based on your list. This can save you an enormous amount of valuable time, especially if you’re looking in the peak months in the Spring.
- Take advantage of the internet & social media
With the emergence of social media and the internet over the past five years alone, finding homes you may be interested in by using the internet and social media can be extremely helpful.
Following real estate agents and the MLS on social media and visiting their websites is a great way to stay up-to-date in almost real-time. There are also hundreds of blogs available on the internet that post homes for sale and all the additional information you’re looking for.
Don’t limit your home search to a single agent, but explore the different options on your own time as well. You never know what you may find!
If you’re a first-time home buyer, I understand how overwhelming everything can seem initially. However, following these three tips and consulting a Hamilton mortgage broker like myself can help ease the process.
Do you REALLY want to buy your dream house? We hope so because this is an important purchase, and you must not take the process lightly! Sure, you may have a pre-approval or an approval in place, but that doesn’t mean now you can through caution out the window. Most of the hard work is indeed done, but there are still some things you need to completely avoid in order prevent any delays in your journey to home ownership. Be sure to avoid the following when making your home purchase:
- DON’T apply for a new Credit Card! – Remember that when you apply for a new credit card, it can be BAD and reflect poorly on your credit rating. Just WAIT.
- DON’T buy a new car! – If you would like to live in a new car instead of the dream home, then go ahead and pick one up.
- DON’T go furnish the home before you own it! – We all know that you already have picked out that new couch, entertainment centre, and flat screen T.V. Avoid buying them until after you close on your home.
- AVOID changing jobs! – Although job changes can provide better pay or a chance for advancement. It could delay your quest for home ownership.
- DON’T close any credit accounts! – It makes sense to clean up your finances by cancelling unused credit cards and transferring balances to other cards to get a lower interest rate when you’re offered them. Don’t do it! This can be a bad move for your credit score.
- DON’T get behind on payments! – Make sure you stay on top of your credit card and rent payments.
- DON’T move money without a paper trail! – Your lender is going to need documentation for all your transactions to make sure you really have enough money. Moving around money, in general, makes things very difficult for you.
- DON’T spend your savings! – You’re going to need cash for down payment and your closing costs.
Buying a house can be overwhelming at times. As mortgage brokers Hamilton, we see it all the time. After all, it is one of the biggest purchases you will make.
Currently, housing prices are rising and down payment options are becoming a little more strict. With all that in mind, it’s not always easy to save up for all the costs related to a house, especially when you have surprise expenses! First-time home buyers will be the most likely to experience unexpected mortgage fees and expenses.
Before you jump into the housing market, make sure you are well-aware of any extra expenses that you may have to face. In this article, the more common unexpected expenses will be outlined as follows:
- Appraisal (Property Valuation) fee
- Mortgage Insurance Premiums
- Legal Fees & Disbursements
- Title Insurance
- Land Transfer Tax
- Property Tax
- Breaking Fees
Within the approval application already you should be aware that there will be some upfront expenses to deal with. The first that you will be presented with is the Appraisal Fee, also know as the “Property Valuation’ fee.
Appraisal (Property Valuation) Fee:
An appraisal gives an estimate of a property’s fair market value and is sometimes requested prior to approval by the lender to ensure that the loan amount is not more than the property value. You can estimate an approximate appraisal fee of $350.
More fees will be revealed upon closing, but don’t have to be! Before signing your mortgage documents, go through them and make sure you know what each expense is for and why it has to be included. For any services that are provided such as a broker, lawyer, and/or real estate agent, make sure you know how they are compensated. When applicable, make sure you get a quote with all the detailed expenses so that you are not overwhelmed with unexpected closing expenses on the closing date!
Mortgage Insurance Premium:
Mortgage Insurance premiums only need to be paid if your Loan-to-value (LTV) is more than 80%. In other words, a down payment less than 20% must be insured through CMHC, Genworth, or Canada Guaranty to protect the lender in case you default on your mortgage payments. The amount is a certain percentage (currently 3.6%) of the mortgage loan and is then generally rolled into your mortgage.
Legal Fees & Disbursements:
You are required to obtain a lawyer whose services involve drafting the title deed, preparing the mortgage, and disbursing the funds upon closing. You can expect an approximate amount for an average house of $350,000 to be $1,500 (including disbursement costs). It is advised to get a quote from your chosen lawyer and make sure it includes all the fees and expenses mentioned.
Title insurance is an insurance policy to help protect you as the homeowner for any problems relating to the ownership or title to your home. Title insurance is optional and the policies will differ in price.
Land Transfer Tax:
Upon acquiring land, you are required to pay a provincial land transfer tax, which is a one-time fee. This expense will be paid on your part by your acting solicitor on the closing date. The amount is based on the value of the property and is calculated by a sliding scale as follows:
- 0.5% up to and including $55,000
- 1% above $55,000 up to and including $250,000
- 1.5% above $250,000
- 2% above $400,000 where the land contains one or two single family residences.
Please note that if you are a first-time home buyer you may be eligible for a refund of either the full amount or a part.
Property tax is, unlike most of the other closing costs, an ongoing one. Property taxes are charged by the municipality you live in and the amount, therefore, depends on that municipality and the surrounding properties. For Hamilton, you are looking at an approximation of $3,000. This amount can be paid on your own, or through your lender (if requested).
Unfortunately, after your mortgage has closed, there will still be possible costs to deal with. The Breaking fee, is penalty fee that will not be charged unless you refinance or switch your mortgage. This penalty can be avoided.
A breaking fee is a penalty charged by your lender when you refinance or switch your closed mortgage before your term is up. You often will have to pay the Interest Rate Differential (IRD), which is 3 months of interest you would have been paying to your lender. This fee can easily be avoided if you only renew or refinance when your term is done. Try to incorporate your mortgage planning with your future so that this kind of penalty does not need to be charged!
These are only the more common expenses that are often not known to homebuyers. Use this as a guide, and when you do go through the mortgage process, be sure to know all the charges involved. By doing that, it will help you plan ahead and ensure a smooth closing, avoiding any surprise expenses!
If you’re looking for one of the leading mortgage brokers Hamilton for advice and help with your next mortgage, contact our team today!
Many first-time home buyers will be experiencing the first-hand effect of Canada’s current economy. Housing prices are increasing still, making it difficult to find the necessary funds for a down payment. For those who are struggling, there are options and the Home Buyers’ Plan is just one!
What is the Home Buyers’ Plan (HBP)? It is a program that allows you to withdraw money from your RRSPs tax-free for a down payment on your house. In order to be able to take advantage of the HBP, you have to be a first-time homebuyer, which means you have not owned a house in the past 4 years. Those who are, can withdraw up to $25,000 as long as those funds have been in your RRSP for no less than 90 days. If you are purchasing a home with a spouse, or common-law partner, and you both meet these standards, you can both access $25,000 for a total of $50,000. Any amount you choose to withdraw and put towards your house, will not be included in your income for that year if you fill out the T1036 form and bring it to whomever holds your RRSP.
Two years after the withdrawal, you must begin to pay back the funds and you can extend the repayment to 15 years. At that time, you should fill out Schedule 7 of your taxes to ensure that the amount is not included in your income for tax purposes. The amount each year will be equal to 1/15ths of the amount you decide to withdraw ($1,600/year if you withdraw $24,000). It’s not difficult to track the repayment with the help of CRA, who will send you a yearly statement of account letting you know your balance, how much you have paid, and how much you have to pay for the next year. You can also access this information online.
If for any reason, you do not pay back the yearly amount for a year, that amount will be included in your income and taxed. On the other hand, the required yearly amount is only a minimum payment, so you have the option to pay the full amount back whenever you want. Consider taking advantage of the money within your RRSP that will be tax-sheltered for the next 15 years. It is basically an interest-free loan to yourself!
Also consider your benefit-cost analysis. What do you gain and what do you lose both in the short and long term if you withdraw funds from your RRSP today? The types of RRSP investments and asset allocation are based on your goals, including short and long term. Those goals may not coincide or include withdrawing funds for a house after a couple of years. So, depending on the investments you have in your RRSP, you could lose money. Your investments could, for instance, be worth less than when you first bought them. In regards to the long term, how much investment income/growth are you missing out on for the next 15 years. Most importantly, ask yourself if you will be able to repay the funds withdrawn when the time comes.
Buying a house and getting financed for a mortgage is one of the biggest financial obligations you will face and, therefore, requires a lot of thought and research. The Home Buyers’ Plan is just one of many options open to you. Let us help you become more aware of the many options and take the stress off by determining the best one for you!
Need to consolidate debt? Here’s what you need to know…
It is the New Year and most are settling back into work or school, either reluctantly or relieved that the holiday bustle is all over. For some, Christmas may be over, but your Christmas bills are just starting to roll in now!
Are you a homeowner struggling with debt, not even just debt associated with the holidays? A Home Equity Line of Credit (HELOC) can help you consolidate debt so that you don’t have to pay the devastating 19.99% or 22% interest rate that you are currently on your high-interest credit cards, lines of credit, etc.
In one of our recent articles speaking about Refinancing, a HELOC was mentioned as a different approach to using the equity in your home to finance a large expense. The difference between the HELOC and refinancing being the disbursement of funds and the type of interest charged. A HELOC is a revolving credit with a bearable interest rate, in comparison to say, a credit card. Similar to your credit card, a HELOC has interest that accrues only on the amount that you withdraw and is paid back in instalments (interest-only payments). The interest rate for a HELOC is, however, more often than not a variable rate and is significantly lower than that of your credit card. The lower interest rate is the result of using your house as collateral for the loan, meaning much less risk for the lender and a lower interest rate for you. It is, therefore, a suitable approach to consolidate debt.
The first step is qualifying for a HELOC. To begin, you must have 20% equity in your home, after which you can access up to 65% of the appraised value of your home (minus the remaining balance on your mortgage). As an example, you may have a home worth $350,000 with a mortgage balance of $150,000. The following calculations will give you the maximum amount that you could qualify for:
65%($350,000) – $150,000 = $77,500
Similar to applying for a first mortgage, other qualifications are necessary. For example, your debt service ratios, credit rating, and estimated property value should meet the lender’s requirements. After all requirements are satisfied, the loan amount will be available to use either by way of cheques or a card similar to a credit card. In this way, you can use the funds to pay out the higher-interest rate debts and save significantly in interest payments. The repayment for your HELOC is very flexible, allowing you to pay as little as interest-only payments and the rest can be paid back as you please.
Since it is fairly easy to qualify (because your home is used as collateral), interest rates are so much lower than credit cards and a large sum is accessible, a HELOC seems very appealing. The HELOC certainly does have its advantages, especially for consolidating high-interest debt and seems to be quite a simple solution.
Yet as in all cases, this product is not for everyone. It takes a very disciplined person to be able to manage a HELOC wisely since the funds are so easily accessible. Similar to a credit card, these funds are not actually earned cash. For a HELOC, however, there is much more at risk than for your credit card, since the cash is borrowed against the equity in your home. You’re house is what is on the line and if you became unable to make payments, you could be subject to losing your home. Fluctuating interest rates could be a major contribution to your inability to make payments for your HELOC, because a variable rate is used. In combination to higher interest rates, your property value could drop and you could be stuck owing more than what your home is worth.
These risks are very real and, thus, should be considered before applying for a HELOC. Use the HELOC to better your present situation, which could include increasing the value of your home by renovating or, as already mentioned, consolidate your debt. To be sure it is the right solution for you, let us help you make a specific plan.
When it comes to your mortgage in Hamilton, many Canadians are or will be experiencing difficulty finding the funds to finance their house, more specifically their mortgage down payment.
Housing prices in the GTA and Hamilton area continue to rise and mortgage lending rules tighten because of the low-interest rates, making it extremely difficult for young couples to purchase their first home. (If you are not already aware, the Finance Minister of Canada confirmed that they are setting a new minimum down payment of 10% on the portion over $500,000 beginning February 16, 2016.) It can also take a couple years to save up for your down payment.
Housing prices in the GTA and Hamilton area continue to rise and mortgage lending rules tighten because of the low-interest rates, making it extremely difficult for young couples to purchase their first home. (If you are not already aware, the Finance Minister of Canada confirmed that they are setting a new minimum down payment of 10% on the portion over $500,000 beginning February 16, 2016.) It can also take a couple years to save up for your down payment by process of diligently setting aside money each month. For instance, if you put aside $300/month for a down payment of $15,000 on a $300,000 house, it will take you just over 4 years. By the end of those 4 years, you could be looking at increased housing prices, which will affect the amount of your down payment.
If you are struggling to find the necessary funds for a mortgage down payment, you have other options.
Having your down payment gifted is just one of those options, and what would be a better Christmas gift this year than a down payment for your dream home? It is no small gift, but it could help you save money upfront as well as long-term. If a full or partial gifted down payment enables you to put 20% down, you will not have to worry about CMHC premiums 100% of the down payment can be gifted as long as you are not self-employed. For those who are self-employed, 5% of the down payment must be from your own funds.
Not anyone can gift you money for a down payment, however. It must be a blood relative, such as your mother, father, brother, sister, or grandparents. As well, the house you are purchasing must be your principal residence.
In order to proceed with a gifted down payment, many of the same steps are taken to confirm your down payment as if the funds were from your savings. No matter what source you are using for your mortgage down payment, it must be verified by the lender in order to prevent money laundering as well, to confirm you are not using funds from a borrowed source. For a gifted down payment, an additional gift letter is required stating that the amount is really a gift and not a loan. This is required because if the latter, the sum of money would be considered a borrowed source, which will affect your TDS and GDS ratios.
The gift letter must contain the amount being gifted, the relationship between you and the giver, and both yours and the family member’s signatures. It is best to have the amount deposited into your account beforehand as you will need proof by account statements that the money has been deposited and the adjustment of your account balance.
It is important to note that receiving a push financially when purchasing a home may be beneficial to some but harmful to others, depending on one’s situation. As previously mentioned, housing prices are high now, but will decrease again in the future. Conversely, interest rates are at an all-time low and will only rise in the future. When having considered all factors, it seems plausible that when it comes time to renew your mortgage you may not be able to afford your house. It is, thus, important to get a pre-approval done so that we can help determine how much you can comfortably afford.
For help with your Hamilton mortgage, get in touch with our team today!
Are you looking to buy another home but your budget doesn’t show that you can afford it? If you already own a modest home, you can have access to a nice sum of money from the equity built up in your current home. Mortgage Refinancing is a way to do that and is done by paying out your existing mortgage and replacing it with new, increased financing, in order to take advantage of increased equity in your home. eYou only need 20% equity in your home in order to access 80% of it, minus the amount remaining on your existing mortgage.
Refinancing is similar to a Home Equity Line of Credit (HELOC) and the two often get confused. What sets them apart is how the proceeds are disbursed, namely you do not have a revolving line of credit, but instead receive a lump sum payment. As well, interest for a HELOC is more than often variable and is charged on the amount you decide to take out, while a refinanced mortgage charges interest on the entire loan but has the option of being fixed or variable.
The question is which mortgage transaction should you proceed with? The answer, of course, depends on your intentions, situation, and the current market. The following are just three reasons why refinancing your mortgage could be the best option:
- You need to access your home equity for large expenses, such as renovations on your existing home and do not have enough money saved up. It could also be used as a down payment for a new house you would like to get now before the house prices go any higher. Whatever purpose you wish to use the refinance for, it is good to know exactly how much you will need since interest is charged on the entire loan, and you don’t want to take more out than necessary.
- A second reason to choose mortgage refinancing would be to help decrease your debt burden. If your refinancing options allow it, you could consolidate some of your high-interest debt to pay it out before it becomes too much. A mortgage has a considerably lower interest rate than a credit card or even a line of credit and could be worth looking into.
- A last example that is very prevalent for today’s market is to take advantage of low-interest rates. Even though you should be aware of penalties charged on breaking your mortgage, you shouldn’t let that prevent you from considering a refinance. Having a lower interest can save you over the longtime, while a breaking fee is only a one-time fee.
What are all the costs involved with refinancing your mortgage? It is important to note that if you are refinancing for a large expense (renovation or purchase of a new house) and rates are not at an all-time low, as they are now, you could be looking at a higher interest rate as well as a breakage free. However, it is always good to look at the long-term advantages. The costs involved could be much less than the amount of debt you continue to accumulate as you keep paying mainly interest for your credit card, for example.
Of course with refinancing you will also have to get an appraisal, in order to determine the current value of your house to determine how much you can then access.
Mortgage refinancing can be an excellent option, but is not advised for everyone. There are numerous factors to consider when deciding whether refinancing is the best option for you. Get some professional help by contacting us so that we can help you determine what that option is!
If you’re considering a mortgage Hamilton, it’s important to know that you have several options when it comes to mortgage products. In this blog post we are going to look at some of those options and how to choose the best one for you.
In addition to our last article about conventional vs high ratio mortgages, a mortgage may also be categorized as:
- open or closed,
- and fixed or variable rate
Open/Closed Mortgages relate to the flexibility you have in paying off your mortgage, while fixed/variable mortgages refer to how the interest rate is calculated and applied. Open mortgages allow you to pay off your loan at anytime and are becoming more popular as they allow for more flexibility with options, for example paying 15% per year, switching payment frequency, and doubling-up your payments.
Unlike Open Mortgages, Closed Mortgages do not allow prepayment or early repayment without a penalty (except on the sale of the property). In the past decade, however, lenders will allow some prepayments options (up to 20%) or lump sum payments, but if you exceed these amounts the penalty fee is significant.
Fixed rate simply means that the interest rate for the specified term of the mortgage remains the same. A variable/adjustable rate mortgage, on the other hand, means that the interest rate fluctuates as the market interest rate changes, coinciding with changes made to Bank of Canada’s overnight rate. Your monthly payments stay the same, but the amount of your payment allocated to interest varies accordingly.
So what is the best option for you? Consider the following risks versus rewards:
Since there are inconsistencies in the payment options for an Open Mortgage, it’s much more difficult for a lender to forecast returns, which in turn means higher interest rates than a Closed Mortgage. Open Mortgages could be a good option if you have a smaller mortgage, are planning on selling your house in the near future, or are expecting a large sum of money. A Closed Mortgage may not be as flexible as an open mortgage, but allows for more security.
In regards to fixed versus variable rate mortgage, it is important to keep in mind the current market and interest rates. Although interest rates tend to be lower for variable mortgages, it is because more risk is involved for you, as the borrower. It is for you to determine whether or not you can afford a rate increase, which can be done by accessing your cash flow.
For most, the largest expense coming out of your cheque is the mortgage payment. Especially for young families who are trying to run on a budget or anyone who is risk averse in general, a fixed rate can grant peace of mind.
With the current market conditions and interest rates being at an all-time low, the difference between the interest rate on a fixed rate and variable rate mortgage has narrowed notably. As well, fixed rates are most popular when interest rates are low and expected to rise in the future, which quite possibly is what will happen in Canada. Interest rates could double in the next little while, making a fixed-rate mortgage seem like the way to go.
Each case, of course, will always be unique to each one’s situation. Having a hard time figuring out what option best suits your needs when it comes to your mortgage Hamilton? Contact us so that we can understand your situation and help you make the best decision for your financing!