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Save on Interest Payments

CENTUM Canada — Thu, 12 Jan 2012 15:00:00 GMT

If you ever watch HGTV Canada, you’ve most likely seen shows like “Til Debt Do Us Part” or Slice channel’s “Princess” – shows that bring in a professional to help people come to their senses and manage their debt.

Everywhere you turn these days, you’ll hear people talking about debt. The economic crisis in the United States and Europe has shone a light on just how volatile markets can be if not managed properly. Now that it’s after the holiday, you’re probably feeling a little pinch in your wallet as well.

Not all news is doom and gloom though. A recent report by Equifax Canada says that Canadians are doing a lot better in paying off credit card debt. It shows that we are taking heed of all the warnings about rising Canadian debt.

That being said, we need to make more of an effort to curb our debt. It was mentioned on the radio that many Canadians have actually made debt reduction a New Year’s resolution. How many succeed remains to be seen, but there are options out there to help you manage your spending and debt. Most solutions will require you to cut back your lifestyle and stop spending so much money! The solution seems logical, but it’s not always attainable.

At CENTUM, we want to help our customers figure out a blue print to manage their finances and become debt free faster WITHOUT having to cut spending. We’ve created a partnership with the SMARTEquity™ Program to help you ultimately pay less interest on your mortgage and other debt.

The SMARTEquity Program provides both online software and personal consultation to create individualized scenarios based on personal financial parameters with built-in flexibility and variability. Through the service, you as a CENTUM client would be assigned a Certified SMARTEquity Coach to help plan out monthly payments and track your progress.

It’s a great tool for anyone who has a mortgage and is interested in reducing the amount of interest they pay in a lifetime.

Come talk to us to get more details on how you can use SMARTEquity to your advantage.

What Happened in 2011?

CENTUM Canada — Mon, 19 Dec 2011 15:00:00 GMT

It’s that time of year again. The market slows to a crawl as Canadians prepare for the holiday season, and we all stop to reflect on the year that has passed. What did 2011 mean to CENTUM and to the mortgage industry? When we think about it, one word comes to mind as the best description: Change.

The vast majority of Canadians have been sheltered from the economic turmoil seen around the world this year. There has been an ongoing debt crisis in Europe and the United States. There has been a significant shift to the political landscape in the east, most notably, the Middle East. Those feeling disenfranchised are now participating in the worldwide OCCUPY movement, which has been experienced in all major Canadian cities, and though most of them are now fading into memory, there is still a movement against the burgeoning separation between the rich and the poor.

This is even more evident with the release of a recent Statistics Canada report that states that Canadian Household debt has reached a record high. With ever increasing debt levels and continued instability, more and more Canadians are in jeopardy of overextending themselves. So far, the Bank of Canada has held interest rates at a historical low, but there is speculation that interest rates will rise in 2012.

Efforts have been made to rein in debt, starting with changes to the mortgage rules. In January of 2011, the Government of Canada announced adjustments to the rules for government-backed insured mortgages. The maximum amortization period was reduced to 30 years. The maximum amount Canadians can borrow in refinancing their mortgages was reduced to 85% of the value of their home. Lastly, government insurance backing was withdrawn on lines of credits secured by homes, like home equity lines of credits. There was fear that the adjustments would hurt the housing market in Canada, but as we’ve seen, it’s been fairly stable around the country.

So what’s in store for the industry in the future? Debt reduction will continue to be a big topic in 2012. Technology and social media will continue playing a big part in creating competition in the mortgage industry. Our clients have access to more information than ever before and CENTUM Mortgage Professionals will be here to help you make sense of it all. CENTUM will continue to be an industry leader in providing their Network with tools and programs that will help our clients manage debt levels and become mortgage-free faster.

We are here to look out for your best interest.

“Snowbirds” Escape for Winter

CENTUM Canada — Thu, 08 Dec 2011 15:00:00 GMT

Everywhere you turn, people are talking about the economic slowdown and if it’s still a good time to buy that vacation home in the U.S. or someplace else. According to the National Association of Realtors, Canadians were the biggest foreign buyers of American real estate in 2010. That shouldn’t be surprising considering our proximity and the strong Canadian dollar.

Real estate companies in places like Florida or California are regularly holding special information seminars for the “snowbirds” interested in finding that escape for winter months. For those considering taking advantage of low housing prices in many parts of the world, do your research before you jump into the market.
Whether it’s in Florida, Hong Kong, or even a cottage by the lake in Canada, make sure you’re informed of all the factors that may affect you as a property owner.

Local Rules and regulations

Many countries have limits on how long you can stay or whether you need a visa. If you own a vacation property in the U.S. you may fall under the “Substantial Presence” rule, which could result in having to file taxes with the IRS. You may also have to pay capital gains when you sell the property. Speak with a local real estate professional to understand what you need to take into consideration.

Taxes

Depending on where you are purchasing a vacation home, there may be tax implications that you need to be aware of. For example, you may be responsible for “non-resident property taxes” if you purchase in Florida or California.

If you’re thinking about renting out your vacation home, your rental income may be subject to local taxes and must be reported on your Canadian personal income tax return. It's important to maintain records of any related expenses that you may have with the vacation property. Talk to a local tax specialist to find out the tax implications of owning a vacation home in the area.

Financing Options

There are many financing options available for people looking to buy a vacation home, but if you’re buying outside of Canada, getting a mortgage isn’t one of them. Canadian lenders do not provide mortgages for properties outside the country. Many Canadians have found financing through a home equity loan, but this option is not for everyone. Some places like the U.S. will allow non-residents to get a mortgage. Start by talking to your mortgage broker or lender.

A vacation property can be a great investment and a perfect excuse to escape life’s daily routines. Staying informed will help you make better decisions on where that vacation home should be and if it fits your lifestyle.
CENTUM Mortgage Professionals may be able to help you get started in your search for that perfect vacation home. Contact an office near you to get started.

How Do You Choose Which One is Better - Fixed or Variable?

CENTUM Canada — Tue, 08 Nov 2011 15:00:00 GMT

As promised in our blog last month, I thought we would do an overview of fixed versus variable rates, as this is a constant water cooler topic. As predicated, lenders have made significant changes to variable rate products. Most of the leading lenders are still offering prime rates at 3.00%, and five-year fixed mortgage rates are hovering in the 3.40% – 3.69% range.

What does this mean to you today? Taking a mortgage balance of $100,000.00 and a 25 year amortization, your payment:

Based on variable rate 3.00%, would be $473.01

Based on the current five year fixed rate of 3.69%, would be $509.35

The cost savings for this example would be $2180.40 over a five year term.

Now, looking back to one year ago when lenders were offering .90% below prime the cost savings were far more tempting, using the same data as above, the cost savings over a five year term would be $5043.60.

Remember, this is based on a mortgage for $100,000.00, so if you owe $300,000.00 then you would triple the savings for a total savings over five years of $15,130.80. So you should be able to see from these examples why the masses have opted to pay the lenders’ penalty and move into variable rate mortgages.

How do you choose which one is better - fixed or variable? The answer can be as simple as looking in the mirror.

Would a potential increase in your current mortgage payment cause you hardship?

Would the unknown or constant media attention for pending increases in Bank of Canada rate cause you stress?

Do you have a low risk tolerance?

If you answered yes to any of these questions then a variable rate mortgage is possibly not the best choice for you.

Although historically variable rates mortgages have provided a lower rate versus fixed it doesn’t mean that variable is for everyone. There is a certain amount of risk associated with variable rate mortgages and the effects that an increase can have a direct impact on your monthly expenses. That means that when choosing a variable rate product, it’s important to ensure that you have a cushion to protect you against payment increases. Fixed rate products give you the guarantee of a set payment for the term of your mortgage.

Variable rates do offer historically lower rates, and that can often translate into long term savings in the amount of thousands of dollars. If you can comfortably weather any possible rate changes or increases then variable rate products are the way to go. If not, then staying with a fixed rate and a set payment could save you a lot of needless stress and worry over your mortgage.

An independent Mortgage Professional, like a CENTUM Mortgage Professional, can provide you with the information you will need to make an informed decision on how to best approach the question of Fixed verses Variable.

According to CanEquity, the average five year fixed rate mortgage taken over the past 10 years is 6.35%, whilst the variable option taken over the same time period shows and average of 4.24%

What does this mean to you in dollars? Based on the 10-year average mortgage rates mentioned above, a $100,000.00 mortgage and a 25 year amortization, if you chose a variable rate mortgage and you stuck it out for the full 10 years then you would have saved $12,165.00 versus staying in the fixed rate mortgage.

Giving Thanks to Low Mortgage Rates

CENTUM Canada — Tue, 04 Oct 2011 15:00:00 GMT

At this time last year, sitting around the feast laden table, many economic forecasts indicated that mortgage rates would be on the rise in 2011. Here we are on the fleeting end of the year and rates for the most part have remained at a historical 30 year low.

Although prime rate remains unchanged, a noticeable trend over the second half of the year seems to be the pricing by the mortgage facilitators or lackthereof on any variable rate products offered. This said most lenders are offering prime minus -0.30% to -0.60% of which still remains a ridiculously great rate, should one be tempted to the fate of the variable option, stay tuned for our discussion on fixed versus variable mortgages.

So should you need to search the corners of your mind to find something to be thankful for, here it is - Prime rate has been below 10% since May 1991, and one has to wonder whether or not we will ever see double digit rates lending again.

With increased purchase power, affordability is relatively attainable in the majority of Canadian cities. As more Generation X and Y’s move into homeownership and Boomers are buying the vacation or pre-retirement homes, now is the time to make the leap of faith. Equity and prices have leveled off in almost every major city with of course the notable exception of Vancouver.

Here are some fun facts for you, while we are talking about increased purchase power:

1981 Prime Rate 22.75% based on mortgage of $300,000 and an amortization of 25 years, the monthly payment would be $5460.28

2011 Prime Rate 3.00% based on mortgage of $300,000 and an amortization of 25 years, the monthly payment would be $1419.74

What does this mean to you? With the likelihood that mortgage rates will rise in 2012 now is the time to look into early renewal options, refinancing or making that purchase you have been holding off on.

Contact your CENTUM mortgage broker post haste.

Fighting Canadian Debt

CENTUM Canada — Tue, 23 Aug 2011 15:00:00 GMT

With Canadian debt levels reaching record highs, we have joined forces with 4 Pillars Consulting Group to help homeowners deal with debt.

CENTUM and 4 Pillars Consulting Group, a leading provider of debtor assistance services, are going to change how the mortgage industry deals with consumer debt by using home equity as part of a long term debt restructuring plan.

Quite often, people who are experiencing financial challenges need more than just a quick fix solution that could leave them vulnerable to huge fees and high interest rates. A recent report conducted by the Certified General Accountants of Canada, stated that “While the pace of debt expansion declined in 2010 and the first quarter of 2011, household debt levels still reached a record high of $1.5 trillion in the first quarter of 2011. If household debt was spread evenly across all Canadians, a family with two children would owe an estimated $176,461”.

For most part, Canadian’s feel that their debt levels will remain manageable, but there are hints that for some, household finances are becoming less favourable. One option that is commonly used to remedy household debit is debt consolidation. This however doesn’t teach you responsible financial habits.

4 Pillars Consulting Group has 12 years of creating financial restructuring plans for Canadians dealing with unexpected debt levels and financial challenges. A detailed financial restructuring plan creates an essential framework to guide decision making during what can be a very challenging time.

This partnership will help more Canadians learn how to effectively manage their debt and meet long term financial goals which would ultimately create financial stability for families.

To find out more about the program, contact your local CENTUM mortgage broker.

Know the Mortgage Process Before You Start

CENTUM Canada — Fri, 29 Jul 2011 15:00:00 GMT

Many first-time homebuyers may be wondering where they should start with the mortgage process. A common source of confusion is the difference between mortgage pre-qualification, pre-approval and rate holds. Recently, the Toronto Star published a good explanation of the difference between these three terms.

Mortgage Pre-qualification

A mortgage pre-qualification provides an estimate of the mortgage total that you may be approved for. The estimate is based on your income, your current debts and estimated down-payment.

It doesn’t take into account your credit rating nor does it give you a detailed analysis of what you can afford. It does however give you an opportunity to better understand what mortgage rates and options are open to you.

Mortgage pre-qualifications take place prior to a mortgage pre-approval and it is important not to use the terms interchangeably.

Mortgage Pre-approval

A mortgage pre-approval comes after a pre-qualification.

This process will provide you with detailed information about the home you can afford based on your savings and income, and the corresponding mortgage payments for a range of purchase prices.

You’ll need to provide the lender specific documentation so they can assess your financial situation and current credit rating and ensure that you satisfy all the requirements. There is usually no application fee associated with a pre-approval and you are in no way committed to the bank or mortgage broker from whom you obtained your mortgage pre-approval. Remember, however, that if you pull your credit score more than three times within six months, you may lower your credit rating.

Once your application is approved, you will get a written conditional commitment for a defined loan amount, which you can show to sellers when purchasing a home.

Mortgage Rate Hold

A rate hold refers to the locking in of a certain mortgage rate for a specified number of days - usually 60, 90 or 120 days. It’s important to note that just because a rate hold ensures you will receive a certain interest rate, it does not mean that a lender has accepted your mortgage application. A lender could still refuse to provide you with a mortgage stating that all conditions were not met.

If you are going with a mortgage broker, you can potentially lock in a few different mortgage rates with various lenders versus locking in with only one bank at a set rate. If your current mortgage rate declines, your lender will typically match it.

If you receive a mortgage pre-approval, you can be automatically signed up for a rate hold so it’s best to get a mortgage pre-approval before you get a mortgage rate hold.

How Much Do You Know About Your Mortgage Protection Insurance?

CENTUM Canada — Wed, 15 Jun 2011 15:00:00 GMT

If you've ever bought a home, you've probably been there: you meet with a lender to sign your mortgage documents and he or she offers you mortgage protection insurance. It can be as simple as ticking off a box and signing on the dotted line to accept the premiums and insure you and your family against death, disability or other catastrophic event that might leave you unable to make your mortgage payments.

But are those premiums competitive? How much will you pay annually for what type of coverage; and what is written in the fine print?

Lending institutions ancillary mortgage products are not the only ones on the market. Independent insurance companies also offer varying types of mortgage protection that can save consumers hundreds of dollars annually.

This month, CENTUM announced an arrangement with Benesure Canada Inc., to make its Mortgage Protection Plan coverage available through participating CENTUM mortgage broker offices and franchises. The plan was first made available to clients of Canadian mortgage brokers in 1995 – today it insures more than 160,000 Canadians.

Says Paul Therien, Director of Business Development for CENTUM, “Mortgage protection is an extremely important part of every transaction and warrants an ongoing review of the best products out there. Based on what we think is the best fit for CENTUM and our clients, we chose Mortgage Protection Plan to recommend to our people.”

Whichever mortgage insurance plan you select, it’s good to know that even with mortgage protection insurance, there is competition. There is nothing stopping you from shopping around for the best mortgage protection for you with the most affordable premiums - the same as you would for any product.

If Disaster Strikes Your Home: Will You Be Protected?

CENTUM Canada — Mon, 30 May 2011 15:00:00 GMT

Recent images of devastating floods, tornadoes and fires, along with warnings by Environment Canada of the potential for severe summer weather, might have you wondering what protection there is for your home in the event of a natural disaster.

Did you know that overland flooding is not covered by home insurance? Government assistance can be there to assist communities decimated by flooding, but it seldom covers the full replacement value of personal property. The Insurance Bureau of Canada, a national association representing private home, car and business insurers, says that homeowners need to be prepared to protect their homes in the event of overland flooding.

Home inspection is a routine part of the home buying process, but it is also important to research the immediate area around a home for environmental factors that might pose risks for property damage.

Understand Your Home Insurance Policy

There are general rules governing whether or not damage caused by natural disasters such as fires, tornadoes, hail storms, earthquakes and floods is insurable; but, according to Canadian-Lawyers.ca, homeowners need to thoroughly understand what individual insurance policies will and will not cover.

Research Land and Environmental Reports

There are various sources of geotechnical and environmental information published online or filed with municipal, provincial and federal government departments.

For example, Environment Canada publishes a list of Provincial flood damage reduction programs* designed to mitigate development in flood-prone regions of Canada. The list includes land zones deemed to be at risk.

Geotechnical reports evaluate slope stability and potential water erosion and are generally performed as part of the development application process. Before buying that hillside home, find out if there are any documented slope-stability or water erosion issues that could potentially put you and your property at risk.

In a neighbourhood on the edge of a forest fire hot spot, ask if there is a municipal fire suppression plan in place and if measures have been taken to minimize fire encroachment on homes.

Before entering into the buying process for a home or vacation getaway in an unfamiliar area of the province or country, learn about environmental and seasonal weather risks in that region. Advance knowledge will help you to make a quick decision when the right home arrives on the market. As well, what you learn now could help you to protect and adequately insure your investment should the unthinkable occur.

While we can try our best to protect our homes, there are times when we're just no match for Mother Nature. Our sincere sympathies go out to our fellow Canadians whose homes have been lost or damaged in recent floods and forest fires.

*If direct link does not open in your browser, flood information can be found in the Water>Water Quantity section of the Environment Canada website.

Poll: Almost 40% of Young Condo Buyers Not Aware of New Lending Rules

CENTUM Canada — Tue, 10 May 2011 15:00:00 GMT

A recent poll conducted by Environics Research Group for TD Canada Trust reveals, not surprisingly, that the majority of urban Canadian condo buyers are first-time home buyers.

Environics polled 806 people in Montreal, Toronto, Calgary and Vancouver who have bought a condo in the past 24 months or intend to buy a condo in the next 24 months. Results revealed interesting attitudes among participants under the age of 35.

For example, under-35 buyers surveyed don't plan to stay in their condos long: 45 percent plan to move after four to six years and 22 percent don’t intend to stay more than three years.

Despite extensive media coverage of Federal changes to mortgage lending rules, 39 percent of survey respondents under age 35 who are planning to buy a condo were not aware of these changes, which could significantly impact their buying options and payments.

The survey also found that, for younger respondents, affordability is the biggest driver in choosing a condo and two-thirds of young urban Canadians would rather buy a house. The opposite is true for the over-50 age group surveyed, who are thinking about downsizing.

The survey results beg the question: “Are young home buyers being realistic about home ownership?” In today’s market, there are likely investment advisors who would strongly caution first-time buyers against buying condos with the assumption that they will have enough equity to ‘trade up’ to a more expensive home after only a few years.

Maintenance and amenity fees combined with monthly interest payments must be factored in when considering the purchase of a condo. The higher these payments - the less equity you could be building over the short term.

Perhaps it is the unbridled pace of growth and low interest rates that have influenced a belief that profits can be made quickly in real estate. Those who got in at the bottom of the real estate boom saw great returns on investment; but like everything else, markets are cyclical. Over-leveraging yourself on the assumption you can turn around and sell your home quickly can be dangerous.

With lending rates predicted to rise, using a mortgage broker to shave even a few points off your mortgage rate and maximizing your down payment can add up to big savings over the life of your mortgage, not to mention smaller monthly payments. This means less money going to pay off interest and more going into your pocket.

The 2011 TD Canada Trust Condo Poll offers other interesting findings on home buyer attitudes among different age groups. Read the full news release on Canada Newswire.

CENTUM Mortgage Brokers negotiate with multiple lending institutions to find you the lowest interest rates.

Consumer Confidence Up, Home Prices Calming Down

CENTUM Canada — Wed, 27 Apr 2011 15:00:00 GMT

Consumer confidence rose by 4 points in April over the previous month, according to the Conference Board of Canada consumer confidence index. It also revealed a sharp shift in Canadians' attitudes toward making major purchases such as homes, appliances and automobiles.

For the first time in almost a year, survey respondents who think now is a good time to make a major purchase outnumber those who don’t. While results vary by province, news reports on the index highlight that Canadians overall seem to be more positive about job prospects and financial security.

As consumer confidence goes up – more good news for prospective home buyers is that prices appear to be levelling off in several real estate markets. The Taranet - National Bank of Canada House Price Index is a composite index of housing prices in six metropolitan areas – Halifax, Montreal, Ottawa, Toronto, Calgary and Vancouver. In February, it showed a modest 0.08 overall rise in repeat sale prices over the previous month, with prices going up in some markets and down in others.

Inflation, along with growing consumer and investor confidence, has economists speculating that the central bank will raise its key interest rate on May 31. Some predict it could go as high as two percent by year’s end and put downward pressure on housing prices.

If you can absorb the effect of a rise in interest rates on your monthly mortgage payments, it might be worth waiting to see where prices go; if you're sensitive to rate fluctuations and seeking a long-term property investment, now may be the time to make your move.

Use our CENTUM Mortgage Calculators to see what your monthly or bi-weekly payments might look like with a CENTUM Broker's negotiated low interest rates.

Breaking Up is Hard to Do: What Are The Barriers to Choosing a Mortgage Broker?

CENTUM Canada — Fri, 15 Apr 2011 15:00:00 GMT

Despite the abilities of mortgage brokers to find rates for home buyers often lower than those posted by the big banks, some buyers are reluctant to leave the comfort of their lending institutions in favour of personal ‘agents’ working in their best interests.

This is supported by evidence that in Canada, first-time buyers are the most likely to use mortgage brokers, while repeat buyers tend to become loyal to their initial lending institutions and are a little more reluctant to switch to independent brokers.

But why?

Brand Loyalty

It’s hard to break up with your long-term financial institution, but switching your mortgage provider doesn’t mean you have to leave your bank. Maybe it’s the fear that your once friendly local bank manager will suddenly treat you like stale cheese, but banks understand - and you might be treated even better when it’s evident that you’re calling the shots.

In fact, it’s a badly kept secret that some of the lowest rates sourced by mortgage brokers are from top financial institutions in the country.

Fear of Hidden Costs

It might seem too good to be true, but consumers generally pay nothing to employ the services of mortgage brokers: financial institutions work with our industry because they know we’re likely to bring them qualified buyers, and they compete to pay us commissions.

When you use the services of a mortgage professional at a lending institution, you are exposed only to the rates and products of that one institution. A mortgage broker works for the buyer as opposed to the lender and has access to 40+ lenders across Canada. Why not let someone negotiate the best deal on your behalf?

Expertise and Reliability

Not all mortgage broker companies are created equal. It’s important to find a broker that you trust and is backed by a solid brand and reputation.

Having a qualified CENTUM mortgage broker working for you as a home buyer doesn’t usually cost you anything – but the advantages can save you thousands of dollars over the life of your mortgage.

CENTUM recently completed its latest national training, awards and conference program across Canada. We congratulate our brokers who earned awards in 2010. Learn more about CENTUM and connect with us via our national Facebook page.

All Grown Up: The City of Vancouver Turns 125

CENTUM Canada — Wed, 06 Apr 2011 15:00:00 GMT

The only city to earn top spot on the Economist Intelligence Unit's list of the world's most liveable cities for five straight years, Vancouver, British Columbia turns 125 years old on April 6, 2011.

Vancouver is a youngster by historical standards, but already the city has gained prominence in world rankings in a number of categories - from real estate to quality of life.

How much do you know about Canada's third largest metropolitan centre? We looked into the history books to unearth some interesting bits of trivia.

In 1886, with a population of 1,000, the town of Granville incorporated as Vancouver; later that year a fire completely destroyed the city, which was rebuilt.
In 1954, the landmark Lion's Gate Bridge was completed to allow a real estate company to sell property it had bought on the north shore of the Burrard Inlet. The structure was built to last 50 years.
The Port of Vancouver is the 4th largest tonnage port in North America, facilitating trade with more than 160 world economies.
Vancouver has 400km/249 miles of cycling routes throughout the city, including a 29km/18 mile dedicated seaside cycling path.
A 2010 report ranked Vancouver as having the least affordable housing in the world. In March 2011, the benchmark price of a typical detached home in greater Vancouver was $866,806. Closer to downtown on Vancouver's west side, the benchmark price was $1,914,639.
Vancouver's Chinatown area is North America's third largest after New York and San Francisco.
In 2010, the population of the City of Vancouver was estimated at 642,843 and the population of greater Vancouver estimated at 2,374,628.
With the smallest carbon footprint of any major city in North America, the City of Vancouver has set a goal to become the world's greenest city by 2020.

Happy 125th Birthday Vancouver.

Additional sources:

Tourism Vancouver
Metro Vancouver

Think That Fixer-Upper is a Steal? Think Again.

CENTUM Canada — Fri, 18 Mar 2011 15:00:00 GMT

An online survey of 1,001 Canadians who have purchased a home within the past two years, or intend to buy a home in the next two years, shows that gender plays a role in the selection of new homes vs. 'fixer-uppers'.

More men than women surveyed in the 2011 TD Canada Trust Home Buyers Report preferred fixer-uppers because they are more affordable (14 percent vs. 8 percent) and allow for renovations to suit individual tastes (37 percent vs. 29 percent).

There is a certain romance in popular culture around the ‘do-it-yourself’ renovation, spawned by ads showing smiling, stress-free couples nonchalantly flirting over bowls of cereal in their Euro kitchens or effortlessly applying the latest paint colours to quaint summer cottages; but many who have lived through a major do-it-yourself project will warn that costs can quickly spiral - especially if you're not as 'handy' as you might think.

Ninety-seven percent of all survey participants indicated that cost was the most important consideration in the home buying process. While the price of a fixer-upper may be lower up front, renovations can quickly eat up savings on monthly mortgage payments if you underestimate the price of materials and labour, or have to repair ‘do-it-yourself’ mishaps.

According to a recent report by the Canadian Environmental Law Association, renovations on old homes might even pose risks to your family’s health.

When it comes to selecting a fixer-upper, your best asset is someone with experience in home renovations. Be sure that you understand potential hidden costs before you jump on that attractively-priced gem in the rough.

Read more about the TD Canada Trust report in Mortgage Broker News

Earthquake in Japan Should Give Canadians Pause

CENTUM Canada — Fri, 11 Mar 2011 15:00:00 GMT

Many of us watching the devastating images emerging from Japan - and who live on the west coast of Canada - are taking serious pause to think about if we could withstand such a catastrophic event.

Fault zones in Canada aren't limited to the west coast. According to the Government of Canada, this country averages about 5,000 small earthquakes per year. A minor tremor struck Southwestern Ontario as recently as February, 2011. Most seismic activity goes unnoticed by us, but occasionally measures high enough on the Richter scale to turn our stomachs and unsettle our feelings of invincibility.

As media coverage of the Japan earthquake and tsunami begins to turn toward our readiness for such a disaster, most agree that the west coast's seismic building codes and upgrades are not up to Japanese standards; but work is being done to construct and upgrade buildings to resist earthquakes. In general, unreinforced masonry buildings and older buildings are at most risk.

While as buyers or renters we can't predict how strong an earthquake will be or how our buildings will perform, we can help to mitigate injury to ourselves and families by preparing ahead of time.

Here are four earthquake preparedness tips gathered from municipal and provincial sources. This is by no means a comprehensive list. For full information on home, school and office safety, visit your provincial or municipal emergency program website, such as that of the City of Vancouver.

Locate the safest areas in your home in advance

These include supporting walls, doorways, inside hallways and spaces underneath stable furniture, such as desks and tables. Avoid windows, tall furniture and heavy objects that could tip over. If things start to move, you will buy extra seconds by knowing immediately where to take cover.

Agree to a family meeting place

In the chaos of a disaster, families and loved ones can get separated. Fire is also a consequence of earthquake damage that can force occupants out of their homes. Have a meeting place established in a safe area near your home, away from power lines and clear from buildings. Most cities have emergency management programs that will also guide local residents to specific locations in the event of disasters.

Have an earthquake kit prepared

You should be ready to be self-sufficient for at least 72 hours following a major earthquake. Emergency preparedness advocates atrongly advise having an emergency kit ready to deploy. The BC Government also offers pre-made “HELP” and ”OK” signs to residents to alert rescuers to the condition of occupants in homes and vehicles.

Protect your home interior from damage caused by falling debris

Anchoring heavy furniture, hot water tanks and appliances to walls and putting latches on cupboards can help prevent extensive in-house damage and injury from falling objects. Seek out professional sources and expertise on how to install in-home reinforcements.

We express our deepest sympathies to the citizens of Japan and Japanese-Canadians who have lost loved ones, or are trying painstakingly to locate missing family members and friends.

Small Spaces Can Offer Big Savings on Monthly Expenses

CENTUM Canada — Mon, 28 Feb 2011 15:00:00 GMT

High home prices are putting pressure on many first time buyers to seek smaller spaces to save on monthly mortgage payments.

Not all small spaces are created equal; it is important to define your lifestyle needs in addition to square footage when determining monthly payments. What are some features of small spaces that can help to reduce your monthly housing expenses?

The 2011 AVID Design Driver survey is a popular annual report on trends in home buyer preferences, geared towards the building industry. Key findings in this report also offer insight into how home buyers can save money and maximize use of space.

Here are four desirable housing features mentioned in the report that could improve your bottom line simply by design.

Energy Efficiency

High fuel and utility costs can shrink your disposable income. Energy efficiency in heating, cooling and household appliances is increasingly becoming a crucial home design feature. Buying a condo or apartment that is built for utmost energy-efficiency is not only good for the environment: it’s good for your pocketbook.

Functional and Space-Saving Design

First time buyers are increasingly squeezed by the price per square foot of homes, especially in urban centres. But some designers do a great job of making the most of smaller spaces and leaving nothing to waste. A home that makes every inch of space functional for work, rest and entertainment can give you the feel of a larger home for less money.

Entertainment-Friendly Kitchen

Whatever the size of the space, a well-designed, large and open kitchen is a perennial standout for home buyers. An attractive kitchen space will likely encourage you to eat and socialize more at home instead of draining disposable income by dining out. It's also a good resale investment.

Convenient Location

Residential buildings located close to bike and walking routes, shopping and work hubs encourage you to leave your car at home, which can help you to save thousands of dollars annually on vehicle maintenance expenses and fuel costs.

A potentially costly mistake to avoid as a first time home buyer is to rush in to a purchase without first considering your lifestyle, existing monthly expenses and debts, as well as personal plans for the future. Don’t be swayed by attractive selling features that don’t suit your needs or are beyond your affordability ceiling.

Canadians Save by Renewing, Renegotiating Mortgages With Brokers

CENTUM Canada — Thu, 17 Feb 2011 15:00:00 GMT

The Mortgage Broker channel in Canada is highly competitive. Research shows that consumers recently renewing their mortgages with Mortgage Brokers came out way ahead of those renewing with other channels.

Maritz Research Canada recently conducted a study of 2,000 Canadians. The study focused on Canadians' opinions of the mortgage industry and specific feedback on their mortgages and experiences with mortgage professionals.

Those who renewed or renegotiated recently with a Mortgage Broker reported an average rate decrease of 1.4 per cent from posted rates, compared with 1.0 per cent among all renewers. It is easy to understand why Broker market share is 27% on early term renegotiation and has potential to grow much higher.

Just one-third of Canadians say they have a good or full understanding of the services provided by Mortgage Brokers. The importance of awareness is clear: Broker market share is roughly twice as high among those who have a good or full understanding of Broker services when compared with those who have a lesser understanding.

The findings demonstrate that Mortgage Brokers could benefit from better explaining their services to homebuyers in their local communities. Satisfied clients can also help their friends and families to save on mortgage renewals and renegotiations, by passing on their knowledge to alleviate any uncertainty about the Broker process.

Calculate the potential payments on your next mortgage using the CENTUM Mortgage Calculator amortization tool.

Is CMHC Mortgage Insurance Anti-Competitive?

CENTUM Canada — Wed, 02 Feb 2011 15:00:00 GMT

A report this week by the C.D. Howe Institute suggests that under the current Canadian mortgage insurance system, it just might be.

In general, a Canadian home buyer must make a minimum five percent mortgage down payment to qualify for CMHC loan insurance and is subject to insurance on down payments of less than 20 percent of the purchase price of a home. According to C.D. Howe, CMHC – a Crown corporation created in 1946 to lead housing programs for returning World War II veterans – now backs up mortgage lending equivalent to 30 percent of the country’s GDP.

The report’s author is Finn Poschmann, an economist and Vice President of Research for the C.D. Howe Institute, which describes itself as a non-partisan, non-profit organization that aims to improve the Canadian standard of living by fostering sound economic and social policy. In a provocative op-ed article for the Financial Post, Poschmann suggests that government involvement in the housing market can “contribute to distortions in the economy and large risks in the financial sector.”

Among the Institute’s recommendations (reprinted from the C.D. Howe press communiqué):

Federal policy should limit taxpayer exposure to mortgage lending risks, by winding back CMHC’s role in the direct provision of mortgage insurance, and allow domestic and foreign providers to take on a larger role. The agency instead would undertake the reinsurance and securitization functions that back private insurers.
Independent of whether Ottawa pursues this recommendation, Parliament should place CMHC under the supervision of the Office of the Superintendent of Financial Institutions, on a level footing with other market participants.
Parliament should also adopt legislation that would support covered bonds – bonds backed by assets such as mortgages as well as the full faith and credit of the lending institution – by domestic financial institutions and clarify creditor arrangements in the event of the bankruptcy of a federally regulated deposit-taking institution. Such legislation would help those institutions compete for low-cost capital and better serve the domestic mortgage lending market.

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Survey Says: Canadian Housing World’s Most Affordable, Least Affordable

CENTUM Canada — Thu, 27 Jan 2011 15:00:00 GMT

In what may have come as a shock to anyone living in Toronto, Montreal or Vancouver, the 7^th Annual Demographia International Housing Affordability Survey recently ranked Canada and the United States the most affordable markets among countries surveyed in 2010.

To be ranked affordable, a market could not have an average housing price of more than three times the median income for that market; nine of the 35 Canadian markets surveyed met this criterium.

Among Canada’s most affordable cities, according to the survey:

Windsor, ON
Fredericton, NB
Thunder Bay, ON
Moncton, NB
Yellowknife, NWT
Charlottetown, PEI
St. John, NB
Saguenay, QC
Trois-Rivieres, QC

But wait. Among the 325 markets surveyed, 82 were major metropolitan centres with populations exceeding 1,000,000; in this group, Toronto, Montreal and Vancouver earned the dubious distinction of being the among the most ‘severely unaffordable’ cities surveyed in North America. No Canadian major metropolitan markets made the ‘affordable’ list. Edmonton, Ottawa-Gatineau and Calgary were ranked as ‘moderately unaffordable’.

Vancouver’s soaring housing prices earned it the rank of third most unaffordable city in the world, with an average home costing 9.5 times the median income in that city. Hong Kong, China, now ranks number one; a home there costs 11.4 times the median income. The average house in Sydney, Australia, ranks only slightly more unaffordable than Vancouver, costing 9.6 times the median income.

So what does this mean? Not much if you don’t agree with the survey results, but it does raise the question of how to address rising housing prices in global urban centres. Interestingly, the least affordable markets generally also have the strictest land use regulations. The report suggests that changes to urban planning are needed to ease pressure on prices in these cities.

With housing prices in Canada’s largest cities forcing many potential buyers out of these markets, more affordable metropolitan centres have an opportunity to promote their advantages to attract skilled workers and new housing investment.

Key Interest Rate Holds, Mortgage Rules Tighten

CENTUM Canada — Tue, 18 Jan 2011 15:00:00 GMT

Canadian banks and mortgage brokers are having mixed reactions to the latest mortgage rules introduced by Finance Minister Jim Flaherty.

The federal knuckle rap is a warning to Canadians to curb our appetites for borrowing more than we can afford.

On the heels of the announcement, the Bank of Canada left the key interest rate unchanged at one percent, but hinted that increases might be on the way.

New mortgage rules include:

A reduction in the maximum amortization period on mortgages to 30 years from 35 years

A lowering of the amount that Canadians can borrow in refinancing their mortgages to 85
percent from 90 percent of the values of their homes
The elimination of government insurance backing of home equity lines of credit

In an interview with the Montreal Gazette, an economist with TD Canada Trust said that the new restrictions will affect about 20,000 of 450,000 real estate resales across the country. The rules will hit buyers in expensive real estate markets the hardest.

New borrowing restrictions take aim at the practice among home owners of borrowing from the equity in their homes to service debt, or sink further into it. The Canadian Association of Mortgage Professionals (CAAMP) offered mixed reaction to the announcement. It released a statement supporting government measures to help Canadians to preserve the equity in their homes and is pleased that no change was made to the purchase down payment requirement; however, CAAMP takes issue with the lowering of the amortization period to 30 years.

Bank of Canada leaves key interest rate alone – for now.

On January 18, the Bank of Canada announced that it will hold the overnight lending rate at one percent, but hinted that increases are on the way. While global economic instability continues, the bank indicated in its media statement that the pace of recovery is moving faster than anticipated.

The timing of Flaherty’s announcement fuels speculation that interest rate hikes are imminent. For Canadians managing oppressive debt loads, even an incremental rise in rates could be costly.

The time is now to get a handle on your debt, while rates are favourable.

Important dates:

Next Bank of Canada rate announcement – March 1
Federal adjustments to mortgage guarantee framework – March 18
Withdrawal of government insurance backing on home equity lines of credit – April 18

Read the Department of Finance Canada news release

Use CENTUM Mortgage Calculators to analyze payments at current lending rates.