September 28, 2023

Mortgage Myth Busters:

Today our post we will be busting common mortgage myths.

Myth #1: Mortgage Brokers Cost Too Much Money – BUSTED

While there may be times when a mortgage broker needs to charge a fee, in most cases we are paid directly by the lender a commission or fee that is based on the size of the mortgage and the length of the mortgage term.

Myth #2: I Need 20% Down To Purchase My Next Home – BUSTED

Anytime a home buyer is purchasing their primary residence or secondary residence for their own use the minimum down payment rule applies of a minimum of 5%.

Myth #3: I Must Use My Bank For My Mortgage – BUSTED

A homebuyer can use whatever financial institution that fits their needs better. Whether it is a Bank, Credit Union, Monoline Mortgage Lender, or Trust Company, the borrower is free to do what is best for them.

Myth #4: The Lowest Rate Is Always The Best For Me – BUSTED

Everyone loves to get the lowest mortgage rate. However, in many cases, the lowest rates come with a lot of strings attached and fine print. The lowest rate today may mean higher costs if you want to break your mortgage, refinance, or even sell your home. It is usually best to have the best rate with the best terms for your own unique situation.

Myth #5: I Must Renew With My Current Lender – BUSTED

Upon the mortgage renewal date, you are free to shop around for the best rate and terms. In many cases, the new lender will pay for your legal and transfer fees. We recommend you start this process 4-6 months before your mortgage renewal.

Myth #6: My Credit Score Will Suffer If I Shop Around – PLAUSIBLE

In general, having your credit score checked many times isn’t a good thing. However, when you are shopping for a mortgage, multiple inquiries for the same purpose within a certain period of time are generally counted as one inquiry.

Myth #7: Borrowing My Down Payment Is Prohibited – BUSTED

While many lenders will not allow a borrowed down payment, Canada’s default mortgage insurers do have a program. You may borrow 100% of your down payment and closing costs, as long as the repayment of the borrowed funds still allows you to qualify.

September 27, 2023

https://peterpaley.com/purchase-plus-improvments-mortgages/

Purchase Plus Improvements is an excellent but underutilized program, especially in our Manitoba real estate market.

The program allows a homebuyer who is applying for an insured mortgage (usually less than 20% down) to include up to $40,000.00 of home renovations or improvements in the mortgage.

Typically the eligible types of improvements are cosmetic (kitchen, bathrooms, flooring, paint), mechanical (furnace, air conditioning, electrical), and exterior maintenance (windows, doors, roof). Ineligible improvements would typically be foundation repairs. The general rule is the renovation should add value to the home.

Why is the program underutilized? This could be stemming from a number of different factors;

1. The program is generally not well known.

2. The renovation quotes need to be provided upfront at the time the application is submitted for approval. This means that the homebuyer needs to have the quotes done even before writing an offer.

3. The real estate market over the last 10 years has not allowed for the required time to get quotes and due proper diligence on a home purchase. The market has heavily favored sellers, and multiple offers were almost always expected.

4. The purchase plus process adds more work for everyone. The REALTOR will need to spend more time helping arrange quotations, the mortgage broker will need to do more calculations and follow-ups with the clients post-funding, and the lawyer will also need to hold the renovation funds in trust until they are completed, inspected, and approved by the lender.

5. The homebuyer will need to have the financial means to cover the cost of the renovations to completion because the lender won’t allow the renovation funds to be released until they are completed, inspected, and approved.

It may be a bit of a hassle. However, in today’s changing market where interest rates and home prices remain higher, mortgage qualification policy remains stagnant and unhelpful, and the market balances itself and dare say moves to a buyer’s market, the Purchase Plus Improvements Program is an EXCELLENT way for a homebuyer to get an improved home they want in a location they want.

Contact us for more details!

#mainstreammortgages #purchaseplusimprovements #mortgagebroker #renovations #firsttimehomebuyer

Countertop Materials for Your Kitchen.

They say the kitchen is the heart of every home, and what better way to treat this important space than by ensuring you have all the right materials?

When it comes to your kitchen, there are a variety of options for cupboards, appliances, and countertops. What you may not realize, is how much you actually utilize your countertop space and the importance of choosing the right material for your cooking habits and style.

If you are considering a reno, or looking to purchase a new home, understanding the pros and cons of different countertops can ensure you make the best choices.

• Granite: A popular and durable option, granite comes in various colors and patterns. Along with being strong, it is resistant to heat and abrasion. However, it is a premium-price material and requires regular sealing every three to five years due to its porous nature.
• Marble: One of the more high-end options, similar to granite, marble provides a much-needed level of uniqueness in its patterns as well as holding up well to heat, cracking, and chipping. On the other hand, marble is more sensitive to scratches and staining and should be resealed at least once per year to improve longevity.
  
• Quartz: One of the most durable and maintenance-free countertop options, quartz comes in various options from vibrant to natural finish and is nearly indestructible under standard home conditions. Not only is quartz scratch-resistant, but it can also resist stains, bacteria, and heat damage.
• Laminate: If you’re looking for a more budget-friendly option, laminate can be a great way to go. Not only can laminate be made to resemble stone, granite, or even quartz at a fraction of the cost, but it is also easy to clean and maintain while being resistant to mold, mildew, and stains. However, bear in mind that laminate is quite sensitive to heat and can be prone to peeling or scratches.
• Butcher Block (or wood): Butcher-block wooden countertops have a great natural look while being a hardworking surface great for food prep and highly resistant to heat. However, as wood is quite porous it is important to properly seal and oil your countertops to reduce bacteria and moisture susceptibility.
• Stainless Steel: Opposite the natural look of butcher-block designs, stainless steel provides a much more industrial kitchen vibe. Stainless steel has become extremely appealing over the years due to the ease of wiping it down and its ability to inhibit bacteria buildup. However, not without its limits, stainless steel has a tendency to result in lots of water spots and fingerprints on its smooth surface. It is also more pricey than other options, but being impervious to heat damage has its charms.
• Soapstone: A wonderfully stain-resistant option, soapstone is entirely non-porous in addition to being heat and bacteria-resistant. However, to maintain this natural stone it needs to be treated regularly with oil and care must be taken to avoid surface damage such as scratches and dents.
• Ceramic Tile: Tile is an inexpensive option for your kitchen (and bathroom) counters, which is easy to install by an experienced do-it-yourselfer. Not only is tile inexpensive, but it comes in a variety of options and colors as well as being hard, durable, and resistant to heat. Keep in mind, the sizing of your tiles as smaller tiles will be more difficult to clean as opposed to larger settings. Tile is also more vulnerable to cracking, though relatively easy to replace a broken piece. It is also important to note that grout can be prone to staining.

Regardless of what type of kitchen you are designing or moving into, knowing how to care for your countertops can help increase your kitchen longevity and enjoyment!

Converting Your Basement to an Income Suite.

With the current interest rates and economic scenarios, many Canadians may be looking for ways to bring in some extra cash. One option for this is to put your home equity to work and consider renovating your basement into a legal income suite! You can do this by using a secured credit line (home equity line of credit or HELOC) to help fund the upfront cash to make changes to your home.

A few things to consider before you invest in renovating to create an income suite include:

Zoning: Before looking into doing anything with an income suite, always double-check if you are zoned accordingly for a smooth renovation. If your zoning does not allow for secondary suites, see if you can rezone.

Local Regulations: Depending on your location, there may be particular regulations that you need to follow or be aware of regarding your suite. A few examples of how the regulations can differ between provinces or cities include:

• In Winnipeg, you cannot have a  suite that is larger than 33% of the combined floor area of the principal dwelling and the secondary suite, or 800 sqft, whichever is less.  The suite cannot be less than 350sqft.   The entrance of the suite must face the street and contain two off-street parking spaces.  Secondary suites are permitted in all zoning districts that allow single family dwellings (A , RR5, RR2, R1, R2, RMF, RMU AND C1).
• In Coquitlam, you cannot have a suite that is more than 40% of the main house floor plan. You are also required to offer a parking spot for tenants.
• In Kelowna, you can only have one secondary suite and the home must have an “S” designation.
• In Calgary, updated zoning legislation has now made it easier to add income suites.
• Toronto has also proposed reforms that will make it easier to add suites.
• In Montréal, anyone carrying out a project involving the addition of at least 1 dwelling and a residential area of ​​more than 450 m² (equivalent to approximately 5 dwellings) must agree with the City of Montréal to contribute to the supply of social, affordable and family housing. It can be a new building, an extension, or the conversion of a building.

Visit the official municipal websites or consult local building departments to obtain accurate and up-to-date information on the rules and requirements in your area BEFORE getting started.

Insurance & Legal Considerations: Before adding your secondary suite, ensure that you have proper insurance coverage or the ability to add additional coverage to protect both the primary residence and suite. In addition, you will want to consult a lawyer and draw up a tenant or rental agreement for any potential tenants. Ontario has a mandatory standard lease agreement that all landlords must use.

Unit Layout and Design: If the zoning and regulations in your area allow you to build an income suite, the next steps are to look at the suite layout and dimensions. Confirm any size restrictions or minimum ceiling height requirements as you are laying out the design for the unit. The unit should have, at minimum the following:

• A separate parking space or two for the renter.
• A separate entrance, kitchen, bathroom, and living/sleeping areas.
• Ventilation and soundproofing measures to enhance livability.
• Consideration of natural light.
• Interlink smoke detectors for primary and secondary residences.
• Separate, independently-controlled ventilation and heating system.
• Proper drainage, sewage connections, and utility separations.
• Outlets, circuits, and lighting that meet electrical code requirements.

Ensure that however your income suite is designed, you are hiring the appropriate building, plumbing, and electrical experts to ensure your suite is up to code and avoid any potential disasters.

Building & Trade Permits: Once you have confirmed that you are properly zoned and able to add an income suite and understand all the regulations for your area, you will want to draft your blueprints and submit a permit application, along with the fee, before you get started. For instance, in B.C. you are required to have a Building Permit for any suite to be considered legal.

IMPORTANT: Even if you are not required to have a building permit, it is important to get these permits for other aspects including insurance coverage should anything happen. Having a building permit will help protect your investment.

In addition to your building permits, you will need to get permits for any plumbing, electrical, and gas renovations before beginning your work.

Inspections & License: Once you have your permits and have begun construction, make sure you understand what inspections are required throughout the process and you schedule them accordingly with local authorities to ensure compliance with building codes, fire safety standards, and health regulations.

If the work meets all requirements, your suite will be approved. The last step is determining if you need a business license. This is not required if your family (parents, children, etc.) will be living in the suite. In Vancouver, for example, if you intend to rent out your suite long-term, you DO need a license. Be sure to check any rules on this in your area.

Incentives: Beyond the ability to earn extra income per month, there are a few additional government incentive programs when it comes to suites including:

• First Nations: If you live on a First Nations reserve, you may be eligible for federal funding that will provide up to $60,000 to help you build an inexpensive secondary suite rental linked to your principal home. If you live in a northern or remote area, this amount is increased by 25%. This is a 100% forgivable loan that is not required to be paid back assuming all guidelines are followed.
• Residential Rehabilitation Assistance Program (RRAP) – Secondary and Garden Suites: This program is open to all First Nations or individual First Nation members, particularly those who own a family home that can be converted to include a self-contained suite for a senior or adult with a disability.
• Multigenerational Home Renovation Tax Credit: A credit for a renovation that creates a secondary unit within the dwelling to be occupied by the qualifying individual or a qualifying relation. The value of the credit is 15% of the lesser of qualifying expenditures and $50,000.
• British Columbia: Beginning in early 2024, BC homeowners will be able to access a forgivable loan of 50% of the cost of renovations, up to a maximum of $40,000 over five years, for income suites.
• Ontario: There are multiple secondary suite programs throughout Ontario, depending on your region. These loans provide $25,000 to $50,000 in funding and are forgivable assuming continuous ownership for 15 years.

While it is important to look online and do your research. Your best resource will be visiting local authorities at the “City of” to confirm that you completely understand the considerations before moving forward with implementing an income suite.