Financing a Vacation Property in Ontario

Thinking of buying a vacation home that you can use at your leisure, instead of renting every summer? Before you sign a purchase agreement, remember that making a smart decision involves more than finding a great view at an affordable price. Purchasing a recreational property can affect your finances and your lifestyle, now and down the road. Here are some important factors to consider.

Take stock of your goals

As a start, ask yourself the following questions. Be honest about what you and your family really want.

How often will you use the property?

How much will it cost to get there?

Will you use it year-round?

Are you looking for an investment property, something to pass down to future generations, or a place to just relax?

Will it become your retirement residence?

Would it make more financial sense to continue renting a vacation property as needed and use your savings for travel or other financial goals?

Create a list of your objectives and share it with your financial advisor and real estate agent. Your financial advisor can help ensure your plans fit with your current financial situation, while your realtor can help narrow your property search.

Financing your property

At DLC Perfect Mortgages, our agents can arrange financing for vacation properties and/or second homes. Depending on the type of property you want to buy, you may be eligible to obtain financing for up to 95% of its value, subject to approval by a mortgage default insurer.

Your primary residence is a good place to look for financing. By tapping into your home equity (its current market value less your outstanding mortgage) you may be able to borrow at a lower rate than if you took out a typical loan.

If you won't be using the property year-round, consider renting out the property to help pay for carrying costs and expenses. Be sure to save all receipts associated with maintenance, utilities, and insurance, as you may be able to claim tax deductions if you are drawing income from your property. Bear in mind you'll still be responsible for keeping the property clean and well maintained.

Pooling your funds with family or friends to purchase a recreational property is one way to reduce the financial burden of ownership, as long as you're prepared to work out schedules for share use and maintenance — preferably in writing. A lawyer's advice can be invaluable in helping work out all potential issues that may arise from shared ownership.

Like any important decision, it's a good idea to do your homework if you are considering a recreational property. A Mortgage Broker, local real estate agent, and lawyer are good sources of advice and information.

Draw on local expertise

Local real estate brokers are a valuable resource who can help you in your planning and budgeting. They understand the market and can give you good estimates on property taxes and annual upkeep. Strict local and provincial rules regulate land use and development. Local expertise can help you learn about zoning and other legislation, such as restrictions on renting, construction or landscaping, that might affect your goals and budget. Check with local authorities to get the appropriate permits and to ensure your plans won't damage sensitive habitats
and ecosystems, such as shorelines.

For more information on financing a vacation property in Ontario, please call 416 807 7123 or email gbarrow@dominionlending.ca

[Source: MyVauly - Scotiabank - 2008]

AIG has joined CMHC and Genworth in announcing the end of insured 40-year amortizations and 100% financing.

Canada's second-largest private mortgage insurer, AIG United Guaranty Canada, confirmed today that it supports the new policy provisions announced by the Department of Finance for loans that are default insured under the Government of Canada Guarantee.
"We view this as a prudent approach taken by the government to support the long-term health and sustainability of the Canadian housing market," said Andy Charles, president of AIG United Guaranty Canada. "We support this direction and will amend our product line-up to reflect the new policy set out by the Department of Finance, commencing October 15, 2008, for all government guarantee mortgage insured loans."
AIG United Guaranty Canada has established a strong presence in the Canadian mortgage market since beginning operations in November 2006. With a customer base of more than 30 lending partners, the company will continue to work with its partners and mortgage professionals to develop solutions for the Canadian housing market.
[source - http://www.newswire.ca/en/releases/archive/July2008/18/c5829.html]

How to Find Your Perfect Home

Looking for a home can be an exciting and exhilarating experience. But before you start your search, you first need to figure out where you want to live, what your housing needs will be both now and in the future, and how much you can spend.

To help you find the home that’s right for you, Canada Mortgage and Housing Corporation (CMHC) suggests you ask yourself the following questions:

How large a home do you need?

Do you need several bedrooms, more than one bathroom, a home office or a two-car garage?

Are you planning on making any lifestyle changes in the near future, for example, are you planning on having children?

Do you have teenagers who will be moving away soon? Or are you close to retirement, and looking to downsize to a smaller home? By clearly setting out your priorities in advance, you can help save yourself a great deal of time and trouble later.

Are there any special features you’d like your home to have, such as air conditioning, a swimming pool or a spare room for a hobby?

What kind of neighbourhood do you want to live in? Remember to take into account such features as how easy it will be to commute to work, whether your children will have a school close by, and how close you will be to family, friends and safe recreational areas and facilities.

Would you prefer to live in a new home or a resale? New homes offer such advantages as more personalized choices, up-to-date appliances and finishings, and often lower maintenance costs. But resale homes can provide easier access to more established services and mature landscaping, and may save you from having to pay GST/HST on your purchase.

What type of home would you feel most comfortable living in? The choices available on the market today range from single-family detached houses, semi-detached and duplexes to townhouses, modular homes and condominiums.

When you’re ready to start looking for a home, some good sources include newspapers, real estate magazines, the Internet, real estate agents and word of mouth. If you’ve decided which neighbourhoods you’re interested in, you can also spend a few days driving around them to look for new development sites or “For Sale” signs.

Another very important step in the home buying process is to contact a Mortgage Agent and get pre-approved for your financing. Now you will know what price range you can look in and this will also help your realtor do their research for your perfect home.

For more information on getting the perfect mortgage for your family, visit Dominion Lending Centres Perfect Mortgages www.gregbarrow.ca, or call 416 807 7123. You can apply online, by phone or by fax

For more information on what features to look for and other factors associated with buying a home, visit www.cmhc.ca, search "Homebuying Step-by-Step" or call CMHC at 1-800-668-2642. For more than 60 years, CMHC has been Canada’s national housing agency and a source of objective, reliable housing expertise.

[Published in part @ www.cmhc.ca February 05, 2008]

Government of Canada Moves to Protect, Strengthen Canadian Housing Market

On July 9, 2008 the Government of Canada announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market. The new measures include:

• Fixing the maximum amortization period for new government-backed mortgages to 35 years;
• Requiring a minimum down payment of five per cent for new government-backed mortgages;
• Establishing a consistent minimum credit score requirement; and
• Introducing new loan documentation standards.

Today’s announcement marks a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.

Read more here: http://www.fin.gc.ca/news08/08-051e.html

15 Key Points Every Customer Should Know on Why They Should Use a Mortgage Broker

1) Mortgage Brokers in Ontario shop the best rates and products from 90 different Banks, Credit Unions and Trust Companies including: CIBC (First line), Toronto Dominion, Scotia, Bank of Montreal, Royal (Merix), and most of the Canadian Credit Unions, ING, etc.

2) Our services are free as the bank pays us a finder’s fee. The Industry is changing and banks now have to compete for business, so they value our referrals. Keep in mind, they spend millions of dollars operating their many branches, plus internal staffing and layers of management, so they can afford to offer deep discounts for the business we bring to them.

3) Isn’t it time the Banks compete for your mortgage business? You wouldn’t get just one opinion from one doctor if your physical condition were in question…why get just one opinion when your financial condition is going through the most significant transaction of its life?

4) Your bank very rarely gives you the best rates and products. Most homeowners renew their mortgage every four or five years automatically, so they rarely receive the best rates and programs. Since our Brokerage sends lenders millions of dollars of new business each month, they always offer us the deepest discounts which the mortgage agent will pass on to you - whether you are purchasing, refinancing or renewing.

5) Our application process is simple and quick. We just take a little info and send it electronically to the lenders that we feel are the best fit for your situation; A mortgage broker should have some feedback later that day or the next!

6) One of our best benefits is that we are available on your terms! Isn’t it frustrating when a bank takes several days to get back to you, and then you have to make your way through their endless voice mail boxes?

7) We take one credit bureau only and forward it to all the lenders! Many people inadvertently disqualify themselves from getting the best rate when they are shopping for a mortgage. When multiple banks pull a credit bureau, your Beacon score drops every time, sometimes eliminating the chance for the best mortgage or a mortgage at all!

8) There’s a mortgage product available for almost everyone now. When a person’s situation isn’t ideal, there’s usually a story about why; maybe they changed jobs, maybe they went through a divorce or another life-altering event and their credit was affected. It is our job to tell your story to the lender that will qualify you.

9) I appreciate your business. I sincerely appreciate your business and want to do a good job for you because I want all your family and friends business in the future! (Has any bank employee ever told you that?)

10) We are a certified Experts. Most bank employees are not certified and only know about their own bank’s products and do not know and cannot advise you to go to another lender where you can get qualified. You wouldn’t go to your G.P. if you needed a specialist. Deal with a mortgage expert specializing in mortgages from all lenders.

11) We work for you, not the banks. We don’t get paid unless we fund your mortgage with a lender that is giving you the product you need and we have no interest in getting the lender more interest on your mortgage, as the higher the interest, the lower the amount we can qualify you for; clearly we work in your best interests, not the lender’s.

12) Rate Protection. If the rates drop before you close you automatically get the lower rate and if rates go up you have the lower rate locked in. The last time you got pre-approved for a mortgage at a bank, did you get a commitment letter? Did they offer you a rate protection like the one we can secure for you?

13) Commitment Letter Every-time. We provide a commitment letter every time so you can relax and be confident your mortgage financing is in place!

14) 85% of all people in the USA use a mortgage broker and we are catching up quickly here in Canada.

15) A mortgage broker is no longer the “lender of last resort”! Actually we are becoming the first choice of the educated borrower.