Ajax Pickering Real Estate Blog

By Lori Mcleod, Real Estate Reporter, Globe and Mail

The Bank of Canada’s decision to cut its key lending rate has paid off the way home buyer David Barbuto hoped, even before he takes possession of his townhouse in Pickering later this month.

Mr. Barbuto, a 39-year-old self-employed associate creative director, decided to go with a variable mortgage despite his girlfriend urging him to opt for the security of a fixed rate.

Variable mortgage rates are moving lower in tandem with the central bank’s quarter-percentage-point rate cut yesterday. For Mr. Barbuto that reinforces his mortgage decision; one that has gone against where much of the crowd has been heading as of late.

“I felt comfortable going for the lower rate of a variable mortgage. I don’t have a crystal ball, but whichever way things go I can look at my mortgage again in six months and decide whether to keep going with variable or lock-in if the posted rates drop,” he said.

The quarter-point rate cut to 4.25% will likely put some confidence back into the market, and that should attract more customers to variable mortgages in the near term, said John Schipper, president of Mortgage Intelligence Inc.

“Unfortunately, people have been worried by all of the headlines. In the next 30 to 60 days I think more people will realize that variable-rate mortgages are a reasonably safe investment and that market will pick up a bit,” Mr. Schipper said.

While the rate cut isn’t really material, it’s a move in the right direction for the mortgage industry, he added. Many of the attendees at a large mortgage conference in Toronto this week expected that rates would go up and were happy that didn’t happen, Mr. Schipper said.

Bank of Nova Scotia was first out of the gates following the Bank of Canada cut, lowering the rate on some of its variable mortgages by a quarter of a percentage point to 6%. The posted rate on a five-year fixed mortgage at the big banks is 7.44%, and a mortgage customer with good credit can likely get that discounted to 6.75%, Mr. Schipper said.

Home buyers have been worried about the turmoil in the U.S. housing market, and have been more willing to pay a little more for the security of locking in, he said. But Mr. Schipper said he does not expect any of the banks to lower the rates on fixed mortgages in the near term.

The Bank of Canada’s overnight rate, or the amount of interest it charges financial institutions for short-term loans, affects the cost of variable mortgages. Fixed-rate mortgages are based on bond yields, and then have a premium added on.

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Before buying your home, find out what’s covered and what’s not

By Nadia Dalimonte, Articling Student, LAWPRO
From New Dream Homes and Condos Magazine

When it comes to the single largest investment most of us will make – buying a home – you want to make sure you’ve protected that investment to the best of your ability.

Why even consider title insurance? Because the unexpected can and does happen. The most typical situation in which homebuyers call on their title insurance policies involves unpaid utility or realty tax bills from the previous owner. The second most frequent category of claims relates to building code issues. For example, a couple buys a house planning to add a new wing to their home. When the building inspector arrives for an on-site inspection, he discovers that an earlier renovation was not done to code, and the whole home needs to be rewired. If the owners have a title insurance policy in place, the insurer could compensate the homeowners for the costs of bringing the electrical work up to code.

Title insurance also protects homeowners if the house is not located on the property accurately and encroaches onto neighboring land, or if a pool has been built that is actually on a neighbour’s property. A title insurer could resolve this problem by buying the piece of land that the house (or pool) actually sits on from the neighbour, and taking care of all the related legal work.

Condominium owners have also found title insurance protection useful. Take the example of a newly built condominium unit purchase. The buyer of a particular unit is shocked to find out that the unit purchased is a different unit from the one that he or she was expecting to buy. Unfortunately, the unit actually acquired is worth less because it does not have a “lakefront” view. In this instance, the legal services coverage available through the TitlePLUS policy was called on, and the buyer was compensated for the difference in value between the unit he took possession to, and the unit he thought he had bought. This legal service coverage, which protects you for losses suffered as a result of the negligent errors of your lawyer, is generally not available from most other title insurance companies.

Title insurance can also benefit you in other ways: It can eliminate the need for an up-to-date survey while protecting you against any title-related issues that would have been identified by that survey.

For many buyers, the fraud coverage provided by title insurance is particularly reassuring: it not only helps protect you if you are the victim of fraud, but also pays the costs involved in defending your ownership in the property and restoring your title to the home.

As with any type of insurance policy, certain exclusions will apply. Typical issues not covered include native land claims, environmental hazards and the buyer’s rights to change the use of the land or undertake renovations or construction. Problems the buyer agreed to in the purchase agreement or failed to disclose to the lawyer will also not be covered. It is therefore vital that you tell your lawyer of any problems that your agent told you about or that came to light when you visited the property. As well, individual policies may contain exceptions specific to the homebuyers’ property. For example, minor utility easements or rights-of-way for a mutual driveway may be specifically listed as exceptions to coverage.

Bear in mind that, in general, if the problem is not a “legal problem,” it is likely not covered. Title insurance provides protection against title-related problems; it is not home warranty insurance, and will not protect you if your fridge breaks down or the furnace gets old. As with any insurance purchase, you should consult the policy for full details of the actual terms and conditions and have your real estate lawyer advise you. When purchasing a home, your real estate lawyer can help you sort out the various protections offered by different title insurance companies in order to get an idea of which risks are covered and which are excluded.

To help homebuyers better understand the benefits of title insurance, and the important role of a lawyer in a real estate transaction, TitlePLUS insurance has created a free Real Simple Real Estate Guide. You can access the guide by going to www.titleplus.ca.

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Contact the Jeffrey Team for more information - 416-388-1960

What many prospective borrowers don’t realize is that the pricing of mortgages and other loans is based in part on their credit-worthiness.  Consumers need to be aware of how their credit is evaluated by lenders, and how they can work to avoid so-called “bruised credit” – people with a lower credit score can find themselves paying a higher interest rate, or even denied access to certain types of loans.

A credit report is a detailed history of how consistently you meet your financial obligations, and provides a picture of your financial health based on your past behaviour.  A credit score is a three-digit number, usually between 300 and 900, representing your overall credit-worthiness, based on personal information from your credit report and other sources.

Both your credit report and score are important.  When deciding whether or not to grant a mortgage loan, lenders refer to an applicant’s credit report and score, along with a range of other factors such as income, employment history, and size of down payment.

The higher your score the more likely you are to be approved for a mortgage and receive favourable rates because the lender considers you to be a better credit risk.  Several factors are used by the two credit agencies in Canada (Equifax Canada and TransUnion Canada) to calculate credit scores:

* Debt payment history.
* Amounts owed compared to your current credit limits with lenders.
* How often you seek new credit.
* Length of time you have had credit accounts.
* Type of credit, such as car loans, lines of credit, credit cards.

About Invis
Invis is Canada’s largest mortgage brokerage firm with a national team of over 750 mortgage consultants. Invis Mortgage Consultants provide unbiased financial analysis, mortgage sourcing and mortgage advice for both first time homebuyers and repeat buyers.  Invis arranged more than $6 billion in mortgages in 2006.

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Contact the Jeffrey Team for more information - 416-388-1960