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This Month’s Edition
September, 2024
Ottawa Blinks
On the heels of the third interest rate drop since June, the federal government on Monday announced major changes affecting the mortgage industry. These changes will impact first-time homebuyers, investors, and anyone purchasing newly-built properties. At the moment these are proposed changes which are planned to go into effect on Dec 15, 2024. Here’s what was announced.
Insured Mortgage Price Cap increased to: $1.5 Million
The price cap for insured mortgages has been increased from $1 million to $1.5 million dollars.
Until now, mortgage insurance was not available for any residential property priced over a million dollars. This meant that if a buyer wanted to purchase any home priced over $1 million, they needed to have the full 20% down payment. Buyers could purchase lesser priced homes for as little as 5% down by paying an insurance premium, but once you reached the $1M threshold, this insurance option was no longer available.
Now the price point has been increased to $1.5M, which will make a big difference in markets such as the GTA and Vancouver. That’s good news.
Expanded 30-Year Amortizations
Ottawa recently made 30 year amortizations available for first-time buyers of new builds (i.e. pre-construction). Now the 30 year amortization option has been expanded to include first-time buyers of any residential real estate, in other words, to include both new build and existing properties.
If you are NOT a first-time buyer, but are purchasing pre-construction, you will also be able to get a 30 year amortization. I am sure that the developers are very happy about this.
Although Something to Consider
A 30 year amortization lowers payments by approximately 8% while increasing the interest payable over the life of the mortgage by 22-25%.
Switching Lenders Without a Stress Test
Until now, if you were renewing your mortgage and wanted to switch lenders, you needed to pass the Stress Test, which meant you had to re-qualify for your existing mortgage loan balance at 2 full percentage points over the actual rate.
Renewing with your existing bank did not require the Stress Test, only if you wanted to switch banks. This effectively locked in many people with their existing lender.
Now, if you have an insured existing mortgage – i.e. if your original loan amount was greater than 80% of the property’s assessed value, you will be able to switch lenders without facing a new Stress Test: This adds a little more flexibility for people renewing their mortgages.
Question: these are all Positive Changes, but do they solve the Real Problem?
While these reforms make it easier for buyers to access more financing, it raises the question: is the government simply throwing more debt at the housing problem?
These changes do not address the core imbalances that we are facing in Canada. We are faced with a housing supply shortage (yes, really), rising costs, surging immigration, and way too many zoning restrictions. By enabling buyers to take on more debt, the risk of long-term financial strain increases without solving the systemic problems that have created the affordability crisis in the first place.
Lakefront Promenade
I’ve been posting a series of articles on Mississauga parks, as part of my ramblings on life in Mississauga. The latest one is on Lakefront Promenade, a large park and marina tucked away in the extreme southeast corner of the city. Somehow, I never managed to visit this place before, but it is impressive, to say the least.
The park itself is great, but the marina is amazing. It’s the home of the Port Credit Yacht Club, who relocated there in 1991, as well as the Mississauga Sailing Club. Check out the article, and I hope you enjoy it! Lakefront Promenade is definitely worth a visit.
Fall is here, and the kids are back in school. Have a wonderful month!
Randy
https://www.youtube.com/@RandySelzer
https://randyselzer.podbean.com/
Plans to Make before Closing Day
When you sell your property and buy your next dream home, closing day can come faster than you might imagine. Before you know it, it’s just weeks away! So it’s important to make the proper plans to ensure everything goes smoothly.
Here are the most common plans you’ll need to make:
- Contact the post office to get your mail forwarded. No matter how thorough you are in updating your address with companies you deal with regularly, you’re bound to miss a few. Using the mail forwarding service will ensure you get that mail.
- Double-check that your home insurance will be transferred on closing day, so your new home is covered from day one. Also, don’t forget to update vehicle and personal insurance (medical, life, etc.)
- Make arrangements with utility companies – phone, electricity, heating, etc. – as soon as possible. Remember, you might be closing some accounts and opening new ones. That can take time.
- If you are upgrading your internet at the new home, a visit from a technician might be required. Make that appointment now.
There may be more arrangements to make before closing day. Create a checklist to make getting it all done easier and less stressful!
Should You Buy a Home that Needs Work?
Imagine you find a home on the market that checks all the boxes. There’s only one issue. It needs work. Perhaps the paint has faded, or the kitchen is old, or there are repairs needed.
Should you make an offer on that home? That depends on many factors, of course.
The first thing you should consider is whether or not the home is otherwise ideal. If it has everything you want — location, size, style, number of bedrooms, etc. — then you may only be a few improvements away from a real gem.
You should also consider how much those improvements are likely to cost. Cosmetic projects — such as painting, replacing light fixtures, etc. — tend to be more affordable. In many cases, those projects are also DIY-friendly. However, major improvements, such as upgrading the kitchen with new countertops, sink, and cabinetry, can be expensive.
Fortunately, homes that need work don’t show as well as pristine listings. So, the cost of doing the improvements you need might be offset by getting the home at a lower price.
The bottom line is, buying a home that needs work is definitely worth considering.
Data Collection & Privacy Protection
Warnings about online security breaches leading to identity theft are often based on worst-case scenarios of scams or viruses, but it’s important to be aware that commonplace online activity can also contribute to the erosion of privacy.
Most people’s social media conversations, browser histories and search-engine activities are constantly contributing to virtual profiles that identify them as prime recipients of automated communications, usually in the form of targeted advertising and news feeds.
For example, if you show particular interest in specific subjects, products or services, you are certain to be exposed to more of the same, curated through an algorithmic analysis of your usage. Fortunately, you can defend against being a target of constant “click-bait” by deleting your internet history on a frequent basis. You can also regularly remove or block website “cookies” that your computer automatically collects and saves to create shortcuts for faster connections when you revisit sites. These “cookies” also collect data about you that is used by online advertisers and curators of content. Furthermore, you can download an advertising blocker that interrupts ads targeted at you.
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