26 Jun

Rent or Buy? The Age Old Question.

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Posted by: Tony Rossander

If you’re reading this and just bought your first home, or you’ve been a homeowner for years, there’s good news. You can feel confident you made the right decision for your long-term economic wellbeing. That’s according to the findings of a study by Mortgage Professionals Canada, the national association that represents the mortgage industry.

The organization decided to take a deep dive and compare owning versus renting in Canada, and conclude which one option would be the best financial decision in the long run.

As it turns out, the cost of ownership was lower than the cost of renting in more than three quarters of the 266 combinations or cases studied, which included locations and types of dwellings.

As of the second quarter of 2018, the monthly cost of owning was lower than the cost of renting for 72 (just 27% of the 266 cases).

But, the study noted, costs of homeownership include considerable amounts of repayment of the mortgage principal. This is a form of saving. When this saving is considered, the “net” or “effective” cost of homeownership is correspondingly reduced.

On a net basis, the cost of ownership is lower than the cost of renting in 202 of the 266 cases (76%), according to the study.

On average across the 266 cases, the monthly cost of owning exceeds the cost of renting an equivalent dwelling by $541 per month. But, when the principal repayment is considered, the net cost of owning is $449 less than the cost of renting.

MPC’s study also found the largest element of the ownership cost (the mortgage payment) is fixed for some time. The result is that the cost of renting will increase more rapidly than the cost of homeownership. The analysis projects the costs of owning and renting for five years and 10 years, assuming that all of the cost components (apart from the mortgage payments) rise by 2.5% per year. The study concluded that homeownership becomes increasingly advantageous over time.

The study concluded by the time the mortgage is fully repaid in 25 years (or less) the cost of owning will be vastly lower than the cost of renting, in every one of the 266 cases. On average across the 266 cases, the cost of owning is projected at $1,549 per month versus $4,655 for renting equivalent dwellings.

Questions? Give me a call and we can chat. 604-612-6252
This article originally appeared in the DLC Newsletter for June 2019

3 Apr

Common Mistakes to Avoid Before You Buy Your Home:

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Posted by: Tony Rossander

Common mistakes to avoid before buying a home include:

  • Changing/Quitting your current job
  • Purchasing a new vehicle
  • Applying for a new or unnecessary credit
  • Spending some of your savings

These changes may improve your lifestyle, but they can affect your ability to qualify for a mortgage. Sometimes, these changes can have such a significant impact on your approval that you no longer qualify for a mortgage.

Understanding the impact that these changes can have, can help you decide when to take action on them. Put off the new vehicle until after you buy your new home, plan to change jobs first to increase your income and then give yourself the needed 3-6 months to make the lender confident that you are settled in before buying.

Again, a pre-approval allows you to plan and prepare for these problems without having to deal with them during the purchase process.

15 Mar

First-Time Home Buyers’ Tax Credit (HBTC)

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Posted by: Tony Rossander

First time home buyers of 2018 take note: you are probably eligible for a $750 rebate on your 2018 income taxes!

The First-Time Home Buyers’ Tax Credit (HBTC) allows eligible first-time home buyers who purchased a home in 2018 to claim $5,000 on their federal income taxes for the purchase of the home. This works out to be a rebate of $750.

Claiming the HBTC is Easy.

Enter $5,000 on line 369 of your Schedule 1, Federal Tax Return.                              5 seconds for $750.

When more than one person is entitled to the amount (for example, when two people jointly buy a home), the total of all amounts claimed cannot exceed $5,000.  In other words, you and your spouse or common-law partner can split it, but the maximum claimed between both returns is still $5,000 total.

You do not need to send any supporting documentation with your tax return, but you d need to keep everything on file in case the CRA requests it at a later date.

To be eligible for this rebate:

  • You or your spouse or common-law partner purchased a home in 2018.

And, one of the three below:

  • You did not live in another home owned by your or your spouse or common-law partner in 2018 or in any of the four preceding years, or
  • You are eligible for the disability tax credit; or
    You acquired the home for the benefit of a related person who is eligible for the disability tax credit.

NOTES:

  1. You, or the related person with a disability, must intend to occupy the home as a principal  place of residence no later than one year after it is purchased.
  2. The tax credit is available for existing homes and homes under construction.
  3. The home must be located in Canada, and must be registered in your and/or your spouse’s or common-law partner’s name.
  4. Almost all home types are eligible, with the exception of co-operative housing corporation which only gives purchasers the right to tenant their unit but not have an equity interest in the housing co-operative.

If you have any questions about the Home Buyers’ Tax Credit. please don’t hesitate to contact me. I am available by phone or email.

 

23 Jan

Buying Your First Home!

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Posted by: Tony Rossander

BUYING YOUR FIRST HOME? – THESE TIPS WILL SAVE YOU TIME!

So you’re wanting to buy a new home? That is some very exciting news. First question, are you prepared?!
We all know big-item purchases are scary. It’s expensive, you are fully committing to this household – there is no turn backing without that pricey consequence. We totally get it.
The ultimate first-step is to do your research. You are going to want to find out the essentials before you start hunting for those pretty houses listed on Pinterest!
Let’s start here.

Credit History
• How many credit cards do you currently have under your name?
• Do you pay your bills on time?
• How many loans do you currently have?
If you own a credit card or have a loan with an established bank, you have credit history. This information is then transferred into a financial summary known as a credit report.

Credit Report
Your credit report states these vital pieces of personal information (DO NOT let other people in on your personal finances. This should be a give-in by now!)
• first and last name
• home address
• social security number (SIN)
• credit cards
• loans
• how much money you owe
• whether or not you pay your bills on time
All this ‘credit’ talk is important because it allows lenders to determine IF they will lend you money. Your lender, whoever you choose to go with, will be on your credit situation right away. The sooner you know what is on your credit, the better!
As for your credit score, it’s best to only have it checked once as having multiple credit check by different lender can cause it to change. Let us know. We’d be happy to help here.

Employment
It is important to have a steady income and also proof of employment for the last two years. Any changes to your employment have to be explicitly explained. Gathering these documents a head of time can save headaches later.

Down payment
In Canada, you need to show a 90-day history of the down payment to prove you have not borrowed the money. We will need to see any movement of that money within the 90 days so its best not to move it around. You are allowed to get a gift from family for the down payment but this money must not be repayable and we will need a letter from that gift giver explaining that!

Consult Your Wish List
It’s good to know what you want in a home if you can do it realistically. Buying a house for two? Thinking of expanding your family? You need to consider what life will look like down the road before you commit and sign that paper. Nothing would be worse than to move into a house that eventually ends up being too small because a couple of kids came into the picture or in a similar situation those grown-up kids come back home from college, university – you get the picture.
It’s also reasonable to think about factors in your dream home such as maintenance, renovations, the longevity of your stay, etc. Cover all bases, it is way better to be safe than sorry.

Finding a Broker
Who should you use to find the best mortgage for you? We think a Broker (like us), especially if you’re a first-time home buyer. There are many lenders in Canada and a broker will be able to sort through all your options.

Finding a Realtor

When it comes to a realtor, you want someone reliable. Makes sense right? A couple ways you can find out whether or not a certain realtor is legit is by doing some online research:
• Do they have a website/social media accounts? Go check it out!
• Double-check if their licence is registered and legitimate
• Look up their client feedback/disciplinary comments against them
• Check out their current listings – price range, are they a busy/relaxed business?
• Send them an e-mail with any questions! Do they have the appropriate knowledge?

Feeling better about buying that first Home? That’s exactly what we like to hear. If you have any other questions, call me today.

17 Jan

New Year, New Ways to Manage that Holiday Debt!

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Posted by: Tony Rossander

NEW YEAR, NEW WAYS TO MANAGE THAT HOLIDAY DEBT!

We hope your holidays were spent warm, safe and in the company of family and loved ones. We also hope that you’re not drowning from all the holiday purchases such as the dinners, the appetizers, the gifts, the gift cards, the drinks, the party favours – shall I continue?
It is expected that most people will spend over their budget during the holiday season. In fact, Canadian consumers spent 3.7% higher than they did last year. According to PwC, Canadians spent, on average, $1,563 each on consumer products this holiday season.
Are you among that group who spent 3.7% higher than last year? Not too worry, we get your generosity and as always, we are here to help you during this NORMAL time period of financial anxiety and discomfort.
Once again, we’re all in this together. You are not alone in your debt situation no matter how high or how low.
Our first suggestion is to put those credit cards on ice and leave them for awhile. Cut out the temptations completely and focus only on the necessary transactions including home utilities, car insurance, mortgage, etc.
This extra money can be put aside and stored in your savings for multiple reasons. It is important that you DO NOT SPEND this lump sum of cash on clothes, electronics, or big ticket items. Just because this money is readily available to you – doesn’t mean it should be spent on materialistic items.
Don’t know what to do with that extra cash and want to make good use of it? Direct this money towards credit card debt (this one is important!!) or perhaps a “nest egg” before a move across the country, retirement, whatever suits you best.
We highly suggest not letting that holiday debt get the best of you by addressing it first and foremost. Do not let this debt slide under the radar and come back mid-year with more debt racked on top of it. Trust us! Addressing your Christmas dues now will make the rest of your financial year reasonably better without having those regrettable thoughts about giving your gifts to your families.
Since it is the beginning of January and new year resolutions are [hopefully] still fresh in peoples minds, make it your 2019 goal to create a monthly spending plan. Setting up a budget will put an end to bad spending habits and increased debt if you take your budget seriously as well as make realistic changes that are suitable to your current lifestyle.
Having a financial plan will force you to look at the numbers and assess your spending. You may be very surprised by the amount of money you are currently using towards just a simple cup of coffee on the way to work.
If you have questions as to how to get started, here is a link to the 10 Basic Steps provided by Smart About Money that takes you through your motivations about your money, how you would like to utilize your money and how to put your budget into action.
Lastly, and this tip is easy, if you already have one or two credit cards that are racking up debt – do NOT apply for a new credit card. We assure you handling one monster at a time is better than taking on multiple beasts.
If you have any questions or concerns as to how you should be spending your money on your mortgage, contact Tony Rossander, or a  Dominion Lending Centres mortgage professional near you.