Tag Archives: mortgages

What property rights do I have if I’m in a common law relationship?

Property right in a common law relationship

When it comes to the division of property in Ontario after a common law relationship comes to an end, many people believe that they benefit from the same legal rights as any married couple, especially when children are involved.

It’s true to say that legal rights pertaining to children will be the same as if you were married, however, the biggest difference between married and unmarried couples is that you’re not automatically entitled to make any claim to the property you’ve shared and possibly contributed to, nor do you have an automatic right to live in the home that you have resided in.

Property right in a common law relationship

When am I entitled to make a claim on a property owned by my common law partner?

Firstly, you would need to be considered to be in a common law relationship according to the Family Law Act and then you would need to provide evidence to prove monetary or another contribution, such as your time, which significantly bettered the household and benefited your common law partner. You may also have a claim if you can establish that the manner in which you operated as a couple greatly prejudiced you while benefiting the other side; thereby entitling you to have an interest in their property.

How do I know if I’m in a common law relationship?

The rules around this vary from province to province but in Ontario, this usually comes down to the length of the relationship and whether any children are involved. If there are no children involved, you are required to have lived together for at least three years before being deemed to be in a common law relationship and where there are children from the relationship, this time may be reduced to one year, although every case is different.

How can I prove my contribution to the household?

This is where the division of property becomes more complex in a common law relationship scenario as the responsibility falls upon the non-owner of the property to provide evidence of their contribution.

Most people in this situation will need to consult a lawyer to represent them in court as it becomes a matter of contract law as opposed to family law. If you feel as though you’ve made a valuable contribution, monetary or otherwise, over the course of the relationship, there are essentially two claims that you might be able to bring to court; unjust enrichment and constructive trust, both of which have different factors that need to be proved for the judge to make an award.

Protecting your interests

Whether you’re in a relationship and about to move into a property owned by your partner or, already in this situation and concerned about protecting your interests, there are ways in which you can be proactive and feasibly avoid the need for court should the worst happen.

Cohabitation Agreements can be drawn up by an experienced family lawyer, outlining how property should be divided if the relationship were to break down. Although this might seem like an awkward conversation at the time, once you and your partner have come to an understanding about where you both stand, it’s much less stressful to address it at the start of a relationship than it is when things may have become strained. You can get a sample cohabitation agreement but you will each need your own lawyer to advise on what your legal rights and obligations are under it for it to be legally binding in Ontario.

If you’re already going through the process of separation from a common law partner, the other arrangement that you could make is a Separation Agreement. As long as the parties are able to agree, a well drafted agreement sets out how the property is to be divided and can again save on time and money in going to court, but it is also enforceable by court should the need arise (again, so long as each party has made full financial disclosure and had independent lawyers acting for them).

Need advice on your particular situation?

If you want to understand how to best protect your assets or you need some help determining what you might be entitled to, contact our team today to book your free consultation with a member of our Family Law team.

Epstein & Associates, Barristers and Solicitors – Posted on August 12, 2019

 

Tagged , , , ,

Here’s Where You Can Buy a Home if You Make Less Than $50,000 a Year

 

The conversation around homeownership in Mississauga and surrounding cities has been a challenging one, especially as prices remain high across all housing types in the city and surrounding municipalities (in fact, the average 905 condo is selling for over $400,000 and has been for sometime now).

But while it’s frustrating for experts—and non-experts who entered the market years ago—to tell prospective homebuyers that they’ll have to move to find an affordable housing, some people might be interested to know that there are indeed still places in Canada that offer affordable homes for single buyers with more modest salaries.

And a recent Zoocasa report reveals where solo homeowners-to-be on a budget might be able to purchase a home.

“While having a dual-income household can greatly improve purchasing power and the ability to qualify for a mortgage, that’s not to say homeownership isn’t in the cards for single-income earning buyers. In fact, according to recent calculations by Zoocasa in celebration of Single Awareness Day (February 15), there are a number of markets where it’s possible to buy a home on one income – and even have money left over,” says Penelope Graham, managing editor, Zoocasa. 

Graham says that, to determine which markets were affordable, the average and benchmark home prices were sourced from regional real estate boards. It was then assumed the buyer would make a 20 per cent down payment and take out financing with a 3.29 per cent interest rate amortized over 30 years, to determine the minimum income required to qualify for a mortgage on the average home.

Those findings were then compared to median income data of “persons living alone who earned employment income” as reported by Statistics Canada.Buying Single - Income Gap - Age 25-64

  • Buying a Home Single - Age 25 to 34
  • Buying a Home Single - Age 35 to 44

Buying a Home Single - Age 45 to 54

So, where can solo buyers most easily afford a home?

Overall, single home buyers will see the best bang for their buck in Eastern Canada and the Prairie provinces, with Regina taking top spot out of 20 cities for greatest affordability.

There, a single buyer earning the median income of $58,823 would enjoy an income surplus of $20,025 on the average priced home of $284,424.

That’s followed by Saint John, where someone earning the median of $42,888 would see a surplus of $18,038 on a $181,576 home, and Edmonton, where earning $64,036 would net a $17,826 surplus on the average home price of $338,760.

MLS listings in Calgary, Lethbridge, Winnipeg, and Halifax also fall within the realm of affordability for single-income purchasers.

So, where are single buyers less likely to purchase a home? As expected, Zoocasa says the Greater Golden Horseshoe (which includes Toronto and the GTA), is out of most people’s budgets.

Graham says a buyer earning the median of $50,721 would fall a whopping $88,361 short on the average $1,019,600 for MLS listings in Vancouver. Toronto real estate listings are the second-least affordable with an average home price of $748,328; a buyer earning $55,221 would face an income gap of $46,858.

Victoria is the third least affordable with an average home price of $633,386, still $39,359 above what the relatively high median income of $86,400 could afford.

Other markets not considered affordable for single buyers include Guelph, Kitchener-Waterloo, London, Montreal, and Ottawa.

Naturally, the housing market is more difficult for single millennials to navigate.

Zoocasa says the research also compared how earnings ranged by age group per location, and which demographic enjoyed the greatest affordability when purchasing a home. Across every market, Gen Xers (35 – 44 and 45 – 54 age brackets) enjoy the greatest earnings and purchasing power, with 11 markets considered within affordable reach (compared to 10 markets across all age groups).

Millennials (aged 25 – 34) had the least earning power in each city, behind Boomers (aged 55 – 64).

Overall, single home buyers aged 35 – 44 purchasing a home in Regina enjoyed the greatest affordability of all, with an income surplus of $24,215. A millennial purchasing in Vancouver had the least, facing a gap of $92,774.

Check out the infographics below to see which Canadian housing markets are most affordable for single buyers, courtesy of Zoocasa.

  • Buying a Home Single - Age 55 to 64

Top 5 Most Affordable Housing Markets for Single Home Buyers


1 – Regina

Average home price: $284,44

Income required: $38,798

Actual median income: $58,823

Income surplus: $20,025


2 – Saint John

Average home price: $181,576

Income required: 24,769

Actual median income: $42,888

Income surplus: $18,038


3 – Edmonton

Average home price: $338,760

Income required: $46,210

Actual median income: $64,036

Income surplus: $17,826


4 – Saskatoon

Average home price: $290,736

Income required: $39,659

Actual median income: $55,758

Income surplus: $16,099


5 – St. John’s

Average home price: $295,211

Income required: $40,270

Actual median income: $51,964

Income surplus: $11,694


5 Least Affordable Housing Markets for Single Buyers

1 – Vancouver

Average home price: $1,019,600

Income required: $139,082

Actual median income: $50,721

Income gap: $88,361


2 – Toronto

Average home price: $748,328

Income required: $102,079

Actual median income: $55,221

Income gap: $46,858


3 – Victoria

Average home price: $633,386

Income required: $86,400

Actual median income: $47,041

Income gap: $39,359


4 – Abbotsford

Average home price: $590,900

Income required: $80,604

Actual median income: $46,714

Income gap: $33,890


5 – Hamilton-Burlington

Average home price: $550,058

Income required: $75,033

Actual median income: $51,253

Income gap: $23,778

Source: Insauga.com – by Ashley Newport on November 1, 2019
Tagged , , , , , , , , ,

Canadians Need Guidance With Their Mortgages

That’s the takeaway from a national survey released this week by Rates.ca, which found half of Canadians aren’t aware of the mortgage options available to them.

Not only that, but Canadians are lacking in some other basic mortgage trivia, with an astounding 9 out of 10 respondents not knowing that mortgage interest is charged semi-annually:

  • 28% think interest is compounded monthly;
  • 17% think it’s bi-weekly;
  • 17% think it’s annually;
  • 28% just have no idea.

Should we be concerned?

confused mortgage consumerDustan Woodhouse, President of Mortgage Architects, and a former active broker who has written multiple educational mortgage books, thinks so.

“Sounds about right. We know about what we pay attention to, i.e., The Kardashians,” he wrote to CMT. “The material concern in this is how easy it makes it for the government to over-regulate the industry, with clients blaming the banksrather than the appropriate parties. This disconnect is deeply concerning.”

Perhaps even more concerning is the fact that only four out of 10 Canadians (39%) know they can avoid paying default insurance on their mortgage if they make a down payment of 20% or more.

With default insurance running anywhere from 45.85% of the mortgage value, we’re talking some serious dinero being spentpotentially unknowingly and unnecessarily.

So, what can be done? Woodhouse admits there are no simple answers, but says making mortgages more tangible to borrowers would be a good place to start.

“The root issue is making mortgages interesting and relevant to clients more often than when they need one,” he said. “It needs to be all about housing, not simply mortgages.”

Paul Taylor, President and CEO of Mortgage Professionals Canada, agrees.

“Unless you deal in mortgages, you only talk about them, generally, once every five years,” he said. “I’m sure at the time of signing, the borrowers understood what their payment obligations were and the schedule; after that, the rest of the information provided was likely filed under ‘nice to know but not relevant enough to me to retain.’”

Making the Case for Mortgage Brokers

With a growing trend towards “do-it-yourself” online mortgage shopping, we wondered if these survey results reinforce the need for mortgage brokers in guiding uninformed borrowers about their mortgage options.

mortgage broker helping clients“Big time…more than ever brokers are required,” Woodhouse said.

Taylor added that the stats “clearly demonstrate the need for professional and impartial advice at the time of purchase/renewal/refinance. And while some may suggest they are comfortable purchasing online without counsel, I think we can see that is inadvisable in almost all cases.”

Taylor pointed to the UK as an example. Following the crash of 2008, he noted the country adopted several policies by 2014, including disallowing borrowers to be able to self-declare income, and requiring mortgage consumers to be provided mandatory advice on mortgage products.

“The last point, I think, would likely begin to receive international discussion/attention if online sales begin to increase too quickly given the data this survey demonstrates,” Taylor said. “Given the size of these loans, the personal liability and the potential interest-cost difference for as little as a quarter-point in interest, I expect there may be some scrutiny on consumer outcomes for these self-serve options.”

Additional Survey Tidbits

The Rates.ca survey revealed some additional interesting findings about Canadians’ knowledge gap when it comes to financial products, including:

  • Nearly 7 out of 10 Canadians (68%) aren’t aware that interest on credit cards is calculated daily.
  • 30% admitted they are unlikely or somewhat unlikely to make the minimum monthly payments on their credit cards.
  • 40% of respondents admitted to not knowing their credit score.
  • 43% said they felt comfortable negotiating their mortgage over the internet.
  • And 94% believe schools should place greater emphasis on teaching financial literacy.
Source: Canadian Mortgage Trends – Steve Huebl 
Tagged , , , , ,

How to protect homes in the event of divorce

As the cost of living soars, more couples are cohabitating, even getting married sooner. But, as Statistics Canada showed, there were 2.64 million divorced people living in Canada last year, and when you throw a family gift into the mix, things get hairy.

“Family gifts are a very complicated area of the law and there are two different ways of looking at it,” said Nathalie Boutet of Boutet Family Law & Mediation. “A gift received before marriage is treated as a pre-marriage asset. There’s a huge exception if that gift is the matrimonial home.”

In other words, pre-marital exclusions don’t apply to matrimonial homes—the reason for which is to rectify a historical transgression that saw women spend most of their time in the matrimonial home but have their name excluded from title, effectively leaving them no recourse upon divorce.

“Parents who want to give money to their child need to understand before marriage that if it goes into a matrimonial home, they end up sharing that with their spouse if there’s a separation,” said Boutet. “If the parents have a condo and they give it to their child who gets married, that becomes equal sharing with the spouse. A parent should understand that first and have a conversation with their child. Sometimes when a person owns a house, they ask the person to sign a marriage agreement as a way to get themselves out of that mess should it ever occur.”

Boutet recommends that in-laws-to-be have the dreaded conversation about signing an agreement that will protect them from relinquishing their asset in the even their child gets divorced.

“I often get called in when parents still own a home and let someone go live in it,” said Boutet. “Sometimes, for planning, have them sign a prenup, or a cohabitation agreement if they’re not going to get married. At the time they begin living together, sign the agreement in case they separate.”

Another interesting scenario divorced couples and their in-laws sometimes find themselves in pertains to cottage ownership. What happens if the couple is married for a period of time during which the cottage was renovated with contributions from the outgoing spouse?

“I have a case right now where the parents own a cottage and the family has been using it for upwards of 30 years, but their child is getting divorced and his wife wants to know what her rights are to recoup renovations,” said Boutet. “The husband’s parents had been very well-advised by their own lawyers and, because they paid for all the materials, the wife could not pinpoint any specific expense she paid out of her own pocket. It was determined that she had done a little here and there, and it offsets the cost of free accommodations she’s had over all the years—she didn’t pay for the land, heating, repairs, things of that nature. So she was entitled to nothing.”

Source: Real Estate Professional – by Neil Sharma 18 Sep 2019

Tagged , , , ,

When You Might Need an Alternative Lender Mortgage

 

The majority of homeowners are blissfully unaware of alternative mortgages. They presume everyone is entitled to sub-3% mortgage interest rates, with no fees of any kind.

But there is a growing, significant percentage of borrowers who need a different type of mortgage financing solution. Sometimes there is no choice. That is why the alternative lending market (B-lenders) is so important to the overall health of the mortgage industry and, indeed, our economy.

Could this happen to you? Who would you turn to if your bank turned you down for a mortgage? How would you know if you are being given the straight goods, or being sold a bunch of baloney?

Plan BIf your primary financial institution (bank, credit union, trust company) refuses you a mortgage, you need to source a mortgage broker who can explore alternative financing options for youhopefully with a B-lender solution. And if that doesn’t work out, then there are numerous private mortgage lenders, too.

Most mortgage brokers are very comfortable working with A-lenders like banks, credit unions and monoline lenders, such as MCAP. And, in recent years, a growing number have expanded their businesses to provide alternative and private lending solutions. Be sure to select a professional who is experienced with these types of specialized products when you are in the market for a non-traditional mortgage.

Mortgage brokers have access to numerous alternative mortgage lenders (B-lenders) who offer excellent solutions above and beyond the traditional branch-based lenders, including:

  • Expanded debt-service ratiossome alternative lenders will allow GDS and TDS ratios as high as 50%, and are not constrained by 35/42 or 39/44 ratios, as traditional lenders usually are. In fact, if the loan-to-value ratio is low, they can get really creative. (For example, Haventree Bank will allow 60/60 when the LTV is under 65%)
  • Tolerant of damaged credit historiesthey will reserve their lowest rates for those with high credit scores (720 and above, sometimes less) but, at the same time, may entertain your mortgage application with a score as low as 500 or even lower.
  • Receptive to forms of income that traditional lenders cannot consider, such as Air BnB income, commission income, tips and contributory income from spouses not even on title. And most are more relaxed in their approach to self-employed borrowers.

Suppose for you the door is closed to banks and all A-lenders. How did you get here? Reasons typically include one or more of the following:

  • Cannot pass the mortgage stress test: inability to meet maximum debt-service ratios.
  • Low credit scores: could be too many late payments, balances too high on credit facilities, collections and liens, or even a consumer proposal or bankruptcy.
  • Non-traditional income: could be commissioned or rely on tips and work in a cash-based business. May even be irregular part-time income. Or perhaps you rent out rooms in your home, or have Air BnB income, foster care income, disability income, child tax benefits, etc. Do you buy, renovate and sell houses, and the capital gains are your only income? You could even own “too many properties.” (Yes, that can be a thing!)
  • Self-employed: you could be a business owner with lots of expense deductions and low reported taxable income. Or maybe you have been self-employed only a short timefewer than the two years A lenders prefer to see.

How long will it take to graduate back to A-lending?

The length of time you remain in an alternative lending product will vary based on your unique situation, but the ideal timeframe is one to two years. As such, most alternative mortgages are offered as one or two-year terms. There are some lenders who offer three and even five-year terms, but this is much rarer.

There are some borrowers who remain in this space for the long haul. It is unlikely they will ever qualify for a mortgage with an A-lender because of credit and/or income issues and that’s ok. They are grateful there is a reasonable cost alternative.

What added costs come with alternative mortgages?

Interest rate

Your interest rate will be a bit higher than those offered by an A-lender. These days, they mostly range from 3.99% to 5.99%. I don’t have the stats, but it feels like a large percentage of these are in the narrower range of 4.24% to 5.24%.

And the lowest rates are typically for a one-year term, with the two-year term coming in a touch higher.

Here are some sample payments to illustrate the impact of different mortgage rates. The difference is not as much as people expect.

  • $300,000 at 2.99% with a 30-year amortization = monthly payments of $1,260
  • $300,000 at 3.99% with a 30-year amortization = monthly payments of $1,425
  • $300,000 at 4.99% with a 30-year amortization = monthly payments of $1,600

Lender fees

Most of the time, your lender will charge a one-time fee of 1% of the loan amount.

Brokerage fees

alternative lender feesWith mortgages arranged with A-lenders, your mortgage broker is paid by the lender at no extra cost to you. This is less the case with alternative mortgages, mainly because the shorter the mortgage term, the less the compensation, yet the workload is at least the same and often more intense.

Therefore, when sourcing an alternative mortgage for you, your mortgage broker will often charge a brokerage fee. They should be upfront about this exact charge early on in the process. The amount varies from broker to broker and from loan to loan. Factors brokers consider are:

  • The complexity and level of effort they anticipate is involved to fund your mortgage.
  • The size of your mortgage. The smaller your mortgage, the larger the fee may seem as a percentage of the loan amount, and the larger the mortgage, potentially the smaller the fee may seem as a percentage of the loan amount.

If you are buying a property, lender and brokerage fees come from your pocket. If you are refinancing, they are deducted from the mortgage advance, if there is enough equity to do so.

All fees and costs must be disclosed properly to you according to your provincial regulator’s rules. Lender and broker fees are paid on your funding date

Other fees

As with most mortgages, you can expect to pay for an appraisal, solicitor and title insurance.

Some lenders charge annual administration or “maintenance” fees of a few hundred dollars, and they typically charge a renewal fee if you accept one of their renewal offers. There is not a one-size-fits-all formula applied when calculating renewal fees.

Monthly property tax administration fees can also be charged (less than $5 per month).

Alternative lenders are a safe route

In the Q1 broker lender market share figures, alternative lenders Home Trust Company and Equitable Bank together held more than 13% of broker market share.

Alternative lenders are not to be feared or disparaged. They serve a very useful role in the mortgage industry and are a terrific midpoint between a bank-issued mortgage and a private lender solution.

When a mortgage borrower does not even fit into the world of alternative lenders, your mortgage broker will need to source a private mortgage solution for you. I will explore this option in future articles.

Source: CanadianMortgageTrends.ca – Ross Taylor

 

Tagged , , , , , ,

Keeping score

Keeping scoreBrokers must be willing to take on the role of educator when preparing the next generation of homebuyers to apply for a mortgage. A recent survey by Refresh Financial found that only 41% of Canadians know their credit score, and 20% are too scared to even find out their score.

Millennials (those born between the early ’80s and mid-’90s) and generation z (those born from the early ’90s to mid-2000s) are particularly anxious about their credit history and uninformed about how to build good credit. Thirty-nine per cent of millennial and gen z respondents said they were more stressed about their credit score than they were a year ago, and 25% admitted they’re not sure what makes up their credit score. In addition, a third of 18- to 34-year-olds said they believe their credit score is holding them back from making important life choices such as purchasing a home.

Click all images to enlarge.

Source: MortgageBrokerNews.ca –  08 Aug 2019

Tagged , , , , ,

How divorces affect mortgages


How divorces affect mortgagesThey say about half of all marriages end in divorce—whatever the figure, complications arise when it comes to dividing assets like homes, and determining who keeps making mortgage payments.

“It’s a commercial transaction irrelevant to marital status,” said Nathalie Boutet of Boutet Family Law & Mediation. “If one person moves out and the other stays in the house, they still have an obligation to pay the mortgage to the bank, so the sooner the separating spouses make an arrangement the better because it could impact credit rating.”

According to Statistics Canada, there were roughly 2.64 million divorced people living in Canada last year—a figure brokers may not find surprising. While divorcing couples often fight over their marital home as an asset, the gamut of considerations is in fact more onerous.

“With the stress test, it’s a lot harder,” said Nick Kyprianou, president and CEO of RiverRock Mortgage Investment Corporation. “The challenge is qualifying again with a single salary. The stress test adds a whole other level of complexity to the servicing.”

Additional complexities include a new appraisal, application, and discharge fees.

“If you have a five-year mortgage and you’re only two years into it, there will be some penalties,” said Kyprianou. “Then there’s a situation of whether or not the person will qualify as a single person for a new mortgage.”

As an equity lender, RiverRock has welcomed into the fold its fair share of borrowers whose previous institutional lender wouldn’t allow one of the spouses to come off title because they were qualified together.

If one spouse is the mortgage holder and the other is not, Boutet explains how the law would mediate.

“Let’s say she owns the house and he moves in and pays her something she would put towards the mortgage but it’s still below market rent, she’s effectively giving him a break,” she said. “Would part of his rent go towards a little equity in the house because he helps pay the mortgage? Or is he ahead of the game because he pays less than he would to rent an apartment? What they have decided in this case is that a percentage of his payment will be given back to him as compensation for helping her out with her mortgage and he will never go on title.”

Boutet recommends that cohabitating couples, one of whom being a mortgage holder, should have frank discussions at the outset about where the rent payments go.

“Sometimes the person who pays rent has a false understanding of paying the mortgage. They have a misunderstanding of what that money is going towards.”

Tagged , , , , , ,