Category Archives: construction mortgages

Proposed mortgage rules aim to reduce financial risk in Canada’s hot housing markets

Vancouver has one of the hottest housing markets in Canada. New mortgage rules proposed by OSFI aim to mitigate the financial risks.

New rules proposed by the federal government to curb financial risks associated with the country’s hot housing markets could make it more difficult to secure a mortgage.

The Office of the Superintendent of Financial Institutions’ new guidelines proposed Thursday include stress tests for uninsured mortgages — loans secured with a deposit of at least 20 per cent on the value of the home.

Those homebuyers will now have to show that they can withstand a two per cent increase on their contractual mortgage rate. This would apply to variable and fixed-rate mortgages, regardless of term.

Using a million-dollar home as an example, buyers looking to secure a mortgage with a 20 per cent down payment at a three per cent interest rate would have to prove they could pay up to $4,652 per month instead of the $3,786 on their contract — a difference of $866 per month.

The changes come as the Bank of Canada looks set to increase interest rates as soon as next week for the first time in seven years.

CANADA-HOUSING/

The B.C. and Ontario governments have been using different tactics to try to cool housing prices in major cities. (Mike Cassese/Reuters)

“Persistently low interest rates, record levels of household indebtedness, and rapid increases in house prices in certain areas of Canada (such as Greater Vancouver and Toronto), could generate significant loan losses if economic conditions deteriorate,” OSFI wrote in a public letter.

But those working in and studying the real estate market say those changes aren’t likely to make a difference, especially given that those uninsured mortgages tend to be less risky because owners have already proved they have access to capital for a down payment.

What experts say will have a greater effect on housing markets is the office’s proposal to ban co-lending arrangements, or bundled mortgages, that sidestep rules designed to clamp down on risky lending.

The regulator said it is considering “expressly prohibiting co-lending arrangements that are designed, or appear to be designed, to circumvent regulatory requirements.”

Fear of a housing bust

Reuters reported in January that regulated mortgage providers were teaming up with unregulated rivals to circumvent rules limiting how much mortgage providers can lend against a property.

The arrangements have proliferated as Canadian regulators tightened lending standards to shield borrowers in case a decade-long housing boom goes bust.

“Bundled” or co-lending agreements with an unregulated entity can enable lenders to offer combined mortgages worth up to 90 per cent of a property’s value. Under federal rules, regulated lenders in Canada are not allowed to lend more than 65 per cent of the value of a home to borrowers with bad or nonexistent credit records.

They also cannot lend more than 80 per cent of a property’s value — even to borrowers with solid credit — without obtaining government-backed insurance.

city of vancouver empty homes

B.C. recently implemented a tax on foreign homebuyers as part of an attempt to reduce real estate demand and prices. (Rafferty Baker/CBC)

Under rules rolled out last October, that insurance requires the banks to run income stress tests on borrowers.

“When you’re looking at excited housing markets, you’re really concerned about where the capital is coming from,” said Tsur Somerville, a senior fellow with UBC’s Centre for Urban Economics and Real Estate.

“In terms of trying to cut down on the flow of capital in the housing, in particular in Toronto and Vancouver, cutting down on the bundling is probably the most important piece.”

Somerville guessed the intention behind the new regulations is likely a mix of wanting to cool those hot housing markets and mitigate risk in the financial sector.

Mortgage brokers concerned

Grant Thomas, founder and partner with The Mortgage Group, said he was concerned about the proposed changes — especially in big-city markets where homes often sell for millions of dollars.

Thomas said bundled mortgages are probably less than a third of all mortgages, but are often used when homeowners are financing the construction of a new home or are in between selling and buying a home.

Mortgage delinquency rates in Canada remain low even in cities like Toronto and Vancouver, he points out.

“The government has been intrusive in our industry in the last three years, and they continue to be so at a rate that is probably unnecessary,” he said.

“I’m not overjoyed whenever the government involves itself in business.”

Affordable housing in Nova Scotia.

Canadian regulators have tightened lending standards to shield borrowers in case a decade-long housing boom goes bust. (Robson Fletcher/CBC)

Thomas said his company and Mortgage Professionals Canada are planning to spend the next few days examining the proposed changes.

The Office of the Superintendent of Financial Institutions is accepting comments until Aug. 17. It said it will finalize the guidelines and set an effective date for implementation later in 2017.

The office said the proposed changes would be guidelines that federally regulated financial institutions would be expected to follow.

 

Source: Maryse Zeidler, CBC News

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Can’t Get a Bank Mortgage? How Do Private Mortgages Work?

Not everyone can qualify for a mortgage these days. Government regulations targeting down payments, investment properties and high-ratio buyers mean that more Canadians won’t qualify for a home loan.

It’s often said that housing is the bedrock of the Canadian economy. But for years, federal regulations have clamped down on the ability to qualify for a mortgage. The self-employed, individuals living in rural areas and those with past credit troubles have long struggled with home financing. Now that struggle is extending to other segments of the population.

Against this backdrop, more and more Canadians are turning to private mortgage lenders for their home financing needs. Although many borrowers think of private mortgages as a last-resort option, they are a viable option for many people.

Private Mortgage Lenders Operate Differently from Banks

A private mortgage is simply a home loan offered by an individual or company other than a bank or traditional finance provider.

One of the biggest benefits of working with a private lender is they operate differently from traditional banks on many levels. Since they get their money through individual investors or groups of investors, they have the freedom to set their own lending criteria. This means they are more flexible in the application process and don’t have to deal with the stringent guidelines set forth by the major institutions. This means that if your situation falls outside conventional lending guidelines, a private mortgage could be your best bet.

Private mortgages are often suitable if you:

  • Are self-employed
  • Want to purchase raw land or unique property
  • Have less than ideal credit
  • Want to invest in real estate
  • Need access to equity in your home, but don’t want to refinance your first bank mortgage due to excessive penalties
  • Need to consolidate high interest rate debt
  • Are looking to renovate existing property
  • Looking for a short-term loan

How Private Mortgages Work

If you’re exploring a private mortgage, the first step is to seek out a broker who provides alternative lending services. The broker will assess your situation and determine if you are eligible for a loan. In particular, they will assess your ability to make the loan payments on time.

From there, the broker will then search for the best mortgage solution that meets your specific needs. They will then structure the deal and put in place an exit strategy so that you know how long the private mortgage will last.

It’s important to note that private lenders usually lend on location. That’s because private mortgages are uninsured, which means the lender falls back on the property should a default occur. That’s why location of the property is extremely vital in determining whether you qualify for a private mortgage and the rate that you’re offered.

Broker fees and legal fees generally apply when securing a private mortgage.

Private mortgages are growing in popularity as more borrowers fall outside the traditional lending guidelines set forth by the major banks. The good news is there are plenty of options for those looking for an alternative lending solution to finance their next property or major purchase.

Source: Canada Mortgages Inc. – 1 September, 2017 / by Sam Bourgi

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When planning home improvements, finding a reliable contractor is an important first step

Hiring the right contractor can make all the difference when renovating your home

Skyrocketing Toronto real estate prices are motivating many existing homeowners to improve their homes, rather than replace them. “We’re seeing a big trend to add value to homes through renovations and to increase living space by building ‘up or out,’” said Kris Potts, president of Toronto’s Norseman Construction & Development. “In doing so, existing homeowners are achieving the living space improvements they would normally seek by moving to another home, but at a much lower cost.”

Whether the homeowner’s goal is to add living space by ‘building up or out’ or just to bring kitchens, bathrooms, and other rooms up to 2017 standards, their biggest challenge is often finding a contractor who can be trusted to do the job right; on time and on budget.

With an impressive 83 per cent score on the consumer rating site HomeStars.com, Norseman Construction & Development is one such contractor. Established in 2005, this family-owned-and-operated company listens to its customers throughout the design and build process; keeping them constantly informed about their project’s progress until it is completed, and each customer has received exactly what they asked for.

“We do our best to take each homeowner’s vision and make it a reality, ensuring that the finished product exceeds their expectations,” said Potts. “We do this by keeping on top of the perpetual advancements in the field, and by addressing the constantly changing needs of local homeowners. Add Norseman’s wealth of experience, superior workmanship and unparalleled attention to detail, and we are able to provide our customers with innovative solutions, competitive pricing and timely results on all their home improvement projects.”

Norseman’s attention to customer needs starts with the company’s consultation process. “Book an appointment on our website, and one of our skilled estimators will come to your home to provide a free quotation on whatever you have in mind,” said Kevin Potts, Norseman’s Operations Manager. “We will do our best to come up with a plan that not only meets your needs, but also fits within your budget and schedule.”

Once the home improvement project is underway, Norseman keeps customers ‘in the loop’ about the project’s progress on a daily basis. “Our people use a program called Buildertrend to upload status reports and photos of each day’s work,” Kevin Potts said. “Our homeowners can log into it as often as they wish to see firsthand how their build is going, and to get answers to any questions they may have.”

“Today’s homeowner is very savvy, thanks to all the home improvement shows on TV,” said Becky Potts, Norseman’s Marketing Manager. “Here at Norseman, we respect this level of awareness by giving homeowners open access to information about their projects at all times. Check out our Facebook, Instagram, and Twitter pages, and you will see our customer-first values in action!”

‘Customer-first values’ is a phrase that means something at Norseman Construction & Development. It is why this contractor provides a two-year warranty on its work – many other contractors only provide a year’s coverage.

It is also why the Potts family insists on alerting customers to project-related issues should they occur. All construction projects carry with them some element of the unknown. Opening walls or floors can bring to light new information not present at the project’s beginning. “Setbacks happen,” said Kris Potts. “When they do, we tell the customer about them upfront, and we fix them in consultation with the customer.”

As well, customer-first values drive Norseman’s approach to its skilled tradespeople. “Unlike some other contractors who are focussed on profits first, Norseman treats its trades fairly,” said Kevin Potts. “In return, we inspire loyalty in the most skilled tradespeople in the industry. The payoff is the best quality work on our customers’ homes.”

That’s not all: Norseman invests money and time in ‘giving back’ to the GTA community. Its charitable efforts include underwriting the annual free Messiah for the City Christmas concert for clients and staff of the United Way. This much-loved music is performed by the Toronto Beach Chorale and members of the Toronto Symphony Orchestra. Norseman also supports Habitat for Humanity, which aids low-income families in attaining affordable housing; serves hot meals at the Scott Mission, and funds numerous local sports and charity events in the GTA.

“The way we treat our customers and our community underscore what Norseman Construction & Development stands for,” concluded Kris Potts. “When you hire us for your home improvement project, you will receive quality-oriented, customer-focussed service from a stable firm that truly puts you first, and who cares about the community we all live in.”

For more information about Norseman & Construction & Development, visit their website or connect on Facebook.

This story was created by Content Works, Postmedia’s commercial content division, on behalf of Norseman Construction.

Source: National Post

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Mike Holmes: Speaking in code

Before starting any job, it’s important to check code to ensure you’re using the proper materials and practices so that when the project is finished, it will pass inspection. By now, you all know that I like to build above minimum code whenever possible — and by doing so, we’ll have stronger buildings that are built using better products and practices.

In fact, because building codes are different depending on where you live, the best way for me to teach others is to leave minimum code at the curb and focus on teaching homeowners how to build better and stronger homes in the first place.

Here’s a question I’m asked often: When it comes to fasteners, what do I use? While there’s not one fastener for all occasions, when it comes to screws or nails, I’m going to use screws wherever possible.

The right fastener for the job

When it comes to fastening, I always say to glue it and screw it. Gluing gives you a solid connection while the screws will keep it there — and not loosen over time. Find the right fastener for the job by checking code first.

There are some projects where you need the right kind of screws, and other jobs where screws on their own just won’t cut it.

Wood screws are used to secure lumber, but the kind of job you’re doing will dictate what kind of screws to use. There are screws that are designed for interior or exterior projects.

In the case of exterior wood screws, you can get them specifically designed for the type of wood you’re using, like cedar, or a pressure-treated wood. Pressure-treated wood is treated with Alkaline Copper Quaternary (ACQ), which is more corrosive for metal. That means you need a fastener that is approved for outdoor use with ACQ treatment in mind.

For indoor projects, drywall screws are designed to hold drywall securely in place because they have deeper threads than a typical screw, which keeps them from dislodging from the wall.

Screws popping out of drywall

Have you ever had your screws pop right out of your drywall? There are a few reasons why this could be happening — but it usually comes down to an issue with the installation. A lot of installations are done too quickly. If you’ve only got one guy installing the drywall as fast as possible they might not be putting proper pressure on the sheet of drywall making sure it’s on tight.

Too many builders worry about speed, without taking the time to truly do the job right.

In the case of minor popping there’s a relatively simple fix. Push the drywall in and ensure it is snug against the stud, and add some new screws. From there, mud over the screws, sand it, and add a fresh coat of paint.

Squeaky floors

If you’ve ever tried to quietly sneak around your house only to be given away by the telltale sound of a squeaky floor — the problem may actually lie in your subfloor, and how the builder fastened the sheathing to the floor joists. You can sheath a subfloor with hardwood but you will find that it contracts and expands depending on the humidity conditions in the home.

Because the hardwood is nailed to the subfloor, in time, as the wood contracts, the nails can pop out.

To keep things quiet and in place, use a plywood subfloor that’s been properly glued down and secured with screws. The glue makes the connection between the sheathing and the subfloor, and the screws hold everything in place without loosening over time.

Builders often use a nail gun to install subfloors, and you sometimes have the nail missing the joist. When not completely secured, the floors will move when pressure is placed on them (every time someone walks on them), causing that annoying squeak you hear.

Before you decide on fasteners for your next project, always check what code dictates in your area. The spec of the job will let you know what kind of fastener you should be using. If it’s my choice — I’m going to glue it and screw it.

Building a strong house that will stand up to anything you can throw at it is all a matter of building it right and choosing the right materials.

Watch Mike Holmes in his series, Holmes Makes It Right, on HGTV. For more information, visit makeitright.ca.

Source: National Post – Mike Holmes | April 1, 2017

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Things You Should Know About Mortgages

Things You Should Know About Mortgages

House hunting can be both exciting and stressful and it’s one of the biggest purchases most people make in their lives. When it comes to financing your home or business, Northwood Mortgage can answer all your mortgage questions, taking the edge off an exasperating experience.

What does a mortgage broker do?

A mortgage broker secures financing for you. He or she can steer you in the right direction and provide guidance on what would be most beneficial to your personal situation. A broker knows the marketplace and is constantly in touch with banks and other lenders to get you the best mortgage possible. Mortgage agents work for mortgage brokers who hold licences.

Who pays them?

The bank or lender is responsible for paying the broker’s commission. That amount depends upon how much you’ve borrowed.

Fixed mortgage

You’ll be paying the same amount in principal and interest for the term of your mortgage no matter what interest rates do. Many homebuyers prefer this type of mortgage because they know what to expect even though there’s a chance interest rates may drop. It’s a tradeoff for stability.

Variable mortgage

Keep an eye on the prime rate because with a variable mortgage you’ll be paying according to what interest rates do. There is a chance you may have to pay more if the rate increases, but on the other hand, you’ll shell out less if rates drop.

Open versus closed rates

An open rate can be variable or fixed. It’s generally more flexible and has a higher rate of interest than a closed mortgage. You can pay it off or make more payments with any penalty. A closed rate can also be variable or fixed. Most folks opt for closed rate mortgages since the rates are lower, but you can only pay on the principal as stated. Paying it out early will net you penalties.

What about the Canadian Mortgage and Housing Corporation (CMHC)?

This government corporation gives residential homebuyers default loan insurance, providing assistance to those who find it financially cumbersome when it comes to buying a house. This insurance will cost you anywhere from 1.75 to 2.95 per cent of the entire amount of your mortgage. It gives banks and lenders protection in case you can’t pay your mortgage. You must be a Canadian citizen to take advantage of what CMHC offers.

Northwood Mortgage is one of the largest mortgage brokerage firms in the Greater Toronto Area and we know the ins and outs of the lending world and will be able to answer any queries you have. Not only do we arrange mortgages for homebuyers, but we also work with investors and those in the industrial and commercial sectors to arrange loans in the millions of dollars.

With all there is to know about mortgages and all the terms that come with that information, your best course of action is to call Northwood Mortgage. One of more than 200 experts available will tell you about their exemplary services.

Source: http://www.NorthwoodMortgage.com

 

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Mike Holmes: Asbestos is like a sleeping monster best left undisturbed lest danger ensues

Many building materials, including some drywall compounds, can contain asbestos, which is why it's important for all crews working on older homes to wear protective safety gear, including respirators.

Mike Holmes: Asbestos is like a sleeping monster best left undisturbed lest danger ensues | National Post

The National Day of Mourning is on April 28 — that’s a time to remember those people who have been affected by workplace injuries or death. It serves as a reminder for all of us to make sure we have the right processes and systems in our workplace to prevent illnesses, injuries and even deaths.

Some of the biggest threats on the job site are the ones you can’t see, such as asbestos.

What makes asbestos so dangerous is its fibres.

Asbestos is a generic term that refers to a number of different mineral fibres. Because of their strength, durability and resistance to fire, these fibres were used widely in building materials and added to residential construction products.

It wasn’t until the late 1970s when it became known that asbestos posed a serious health risk, and since then it has been banned from building materials. It was used in vermiculite insulation, insulation around pipes and water tanks, roofing compounds, shingles, sealants, caulking, adhesives, vinyl tiles, drywall compounds, even some electrical parts.

When asbestos fibres are disturbed, they are released into the air, and if they’re inhaled they can get trapped in the lungs and cause serious health issues, including cancer.

Canada has one of the highest rates of mesothelioma, which is a type of cancer caused by asbestos.

Although asbestos isn’t currently used in construction materials, there are many older homes that still contain it. Any home built before 1980 should be professionally checked for asbestos, especially if a renovation or home improvement is planned. (Getting these materials properly removed by a professional company through remediation can drive up the cost of your reno.)

Canada has one of the highest rates of mesothelioma, which is a type of cancer caused by asbestos.

Professionals can take samples from suspect materials, such as walls, ceilings, vinyl floor tiles, siding, insulation and roofing materials. These samples are then sent to a laboratory for analysis. If the presence of asbestos is confirmed in any of the samples, don’t disturb the materials —­ whether by sanding, cutting, sawing or removing it; leave it to the professionals.

Some people might panic and start ripping out the material and products themselves, but that is not at all advisable. Disturbing asbestos and materials that contain asbestos is what makes it dangerous. That’s why contractors and their crews should always wear protective clothing and gear, especially during demolition. You never know what might be found, and what might be a hazard.

If a material that contains asbestos is in good condition, it might not need to be removed; however, it’s important to monitor it for signs of deterioration, because as soon as any fibres get loose, issues can start to arise.

There are some temporary fixes to prevent asbestos-containing materials from getting damaged and fibres getting loose, but they should only be done a professional contractor. Dealing with asbestos-containing material is never DIY.

Whenever hiring a pro to work on your home, always make sure they’re qualified to do the job right, which includes taking the proper safety precautions and knowing how to deal with potentially hazardous materials, like asbestos, the right way.

Ask what type of safety gear they normally use during demolitions, and the course of action they would take if they suspect any material contains asbestos. A contractor who doesn’t make the health and safety of their own crew a priority will likely not care about yours either, so do your homework. Ask if they have a professional asbestos abatement company that they normally work with. Who are they and what are their credentials? What’s their track record? Your contractor should be able to talk to you, not just about doing the job right but also about proper cleanup and safe disposal of materials.

Asbestos in homes and on the job site is a health risk. Too many contractors have years taken off their lives because they didn’t protect themselves with the right safety gear, such as gloves, safety glasses and of course respirators. Doing a job right means doing it safe. It protects homeowners and pros, too.

Source: National Post. Watch Mike Holmes in his series, Holmes Makes It Right, on HGTV. For more information, visit makeitright.ca.

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…mortgages made simple…

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THE RAY C. MCMILLAN ADVANTAGE

The Ray McMillan Mortgage Team  is licensed through Northwood Mortgage Ltd. We deal with major banks, trust, life insurance, finance companies and private lenders. We are licensed to provide the most competitive mortgage rates and terms available for your real estate financing needs throughout Ontario.

OUR SERVICE INCLUDES:

 

  • First and second mortgages
  • Transfers
  • Condominium/Townhouse purchases
  • Home Improvement Loans
  • Construction Loans
  • Debt Consolidation
  • Refinancing
  • Power of Sale
  • Multi-residential
  • Vacant land
  • Cottages and recreational properties
  • Rural and farm properties

 

 

ARE THERE ANY COSTS INVOLVED?

When we arrange a prime residential first mortgage the lender pays us a finder’s fee.This does not affect the rate our terms of the mortgage in any way.

When we arrange any other type of mortgage that does not qualify as a prime residential mortgage then the lender does not pay us. We must then charge a brokerage fee*. The fee is based on the complexity involved to arrange the mortgage.

any-questions

You have mortgage questions, the Ray McMillan Mortgage Team has answers.

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