Ajax Pickering Real Estate Blog

There are usually many costs, on top of the buying price, that you must consider when buying a home in Pickering or Ajax. These extra fees, such as taxes and other additional costs come into play whether you’re looking to buy your first home, or trading up to a larger or smaller one. You will be surprised of an unwanted financial nightmare on the closing day if you’re not informed and prepared in advance. However, some of these costs are only one-time fixed payments, while others unfortunately represent an ongoing monthly or yearly commitment. It’s better to know about these costs are ahead of time so you can budget properly, even if they don’t apply in your situation.

Whether it’s your first, second or tenth home, buying real estate is a major milestone and there are many important details to address, during the process. The last thing you need are unbudgeted financial obligations cropping up hours before you take possession of your new home.

Carefully view the following list to make sure you’re budgeting properly for your next move.

1. Appraisal Fee
Your lending institution may request an appraisal of the property, which you will be responsible to pay for. Appraisals can vary in price from approximately $200 - $350.

2. Survey Fee
If the home you purchase is a resale, your lending institution may ask for an updated property survey. The price for this survey can vary between $800 - $1000.

3. Property Taxes
Your lending institution may decide to include your property taxes in your monthly mortgage payments, depending on your down payment. If your property taxes are not added to your monthly payments, ensure to have annual proof that your taxes have been paid.

4. Property Insurance
Home insurance covers the replacement value of your home. Proof that you are insured will be requested by your lending institution will request as it protects their investment on the loan.

5. Legal Fees
A lawyer must be involved to review all paperwork, even of the simplest of home purchases. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer.

6. Mortgage Loan Insurance Fee
Depending upon the equity in your home, some mortgages may require mortgage loan insurance. This type of insurance will cost you between 0.5% - 3.5% of the total amount of the mortgage. In addition to your mortgage and tax payment, these payments are also made monthly.

7. Mortgage Brokers Fee
In order to source a lender and organize the financing, you will need a mortgage broker who is entitled to charge you a fee for his/her services. However, it better for you to look around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost.

8. Moving Costs
The cost for a professional mover can cost you in the range of $50-$100/hour for a van and 3 movers, and 10-20% higher during peak demand seasons, like Christmas or March break.

9. Service Charges
Any new utility that services your hook up, such as telephone or cable, may require an installation fee.

10. Maintenance Fees
In your budget, ensure to have a section for maintenance fees, such as carpet cleaning or deck painting.

11. Water Quality and Quality Certification
If the home you purchased is serviced by a well, you must consider having your water checked regularly. Where you live determines whether or not a fee is charged to certify the quantity and quality of the water reaching your home.

12. Local Improvements
If the town or neighbourhood you live in has made local improvements, such as the addition of sewers or sidewalks, it could impact a property’s taxes by thousands of dollars.

13. Land Transfer Tax
Whenever a property changes hands, this tax will be applied. The amount that is applied can vary from one property to another.

As you can see, taking those extra costs into consideration is very important. You need to budget properly for your next move to avoid facing any financial troubles. Consult your broker or sales associate if any extra costs will be applied to you. Remember, purchasing a home is a major milestone and if you plan your budget accordingly, you will enjoy the best of your home.

————————————————————————————————————

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

The Bank of Canada announced yesterday that it will leave its key interest rate unchanged, as anticipated by most economists.

In its statement the Bank commented that its current key policy rate is consistent with achieving the inflation target over the medium term. The Bank forecasts that the Canadian economy will grow by 2.6% in 2007, 2.3% in 2008, and 2.5% in 2009, and that inflation will “return to 2% in the second half of 2008.

As a result of this decision, lending institutions in Canada are expected to keep their prime lending rate steady. However, people looking for a new variable-rate mortgage should note a recent mortgage rate trend  on this type of mortgage has been adjusting upwards in recent weeks. Existing variable rate mortgages do remain unchanged but new variable borrowers are paying more.

If you would like to discuss how current trends in mortgage rates impact the best mortgage strategy for you, contact your Real Estate Agent or Mortgage Consultant. He or she can obtain a mortgage pre-approval if you’re wanting to buy a home with a rate hold of up to 120 days, therefore you will know how much you can afford.

————————————————————————————————————

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

Another Record Set; Longer mortgage terms fuelling cost, industry warns

Garry Marr, Financial Post

Real estate prices hit another record high last month in the country’s top 25 markets, a move some commentators say reflects the growing dependency of Canadians on debt to finance purchases.

Real estate author Don Campbell says the latest statistics from the Canadian Real Estate Association are further proof that the newest trend in lending — long-term amortizations that have increased to 35 and 40 years from 25 years — is fuelling price increases.

“I would say one-third of the percentage point price increase is due to [longer amortizations],” Mr. Campbell said.

“Real estate is driven by monthly payments and you can afford more and pay less monthly when your amortization is moved from 25 years to 40 years.”

The Ottawa-based Canadian Real Estate Association said yesterday the average price of a home sold in the country’s largest cities rose to $325,881 last month, an 11.2% increase from a year ago.

With 10% down and a 7.19% interest rate on a five-year mortgage, a consumer with an average Canadian home would make monthly payments of $2,088.80 based on a 25-year amortization. Based on a 40-year amortization, the consumer would make monthly payments of $1,840.67.

The consumer with the longer amortization would pay interest costs of $589,786, compared with interest costs of $333,189 for the mortgage amortized over 25 years.

“I think this is having more of an effect on the low end of the market than the top end,” said Mr. Campbell, who thinks people are paying more for homes because with the new mortgage products they can afford more. “Instead of 11% price increases, they might be 6% to 8% without [longer amortization].”

A report from the Royal Bank of Canada this week suggested as much as 50% of new insured mortgages — those with less than 20% down payment — are going for amortizations of more than 25 years. The bank suggested as much as 25% of refinancings are for the longer amortizations.

Benjamin Tal, a senior economist with CIBC World Markets, said it’s probably too early to suggest the longer amortizations are fuelling an inflationary market for real estate. “It’s not a big enough piece of the market yet to matter,” he said. “Potentially, it could be big. Look at how much overall real estate there is and this is not enough to influence markets yet.”

Elton Ash, regional executive vice-president of Re/Max for Western Canada, said the new products are helping consumers to buy. “It certainly has helped with the affordability, especially in markets like Vancouver and Victoria,” he said. “But I don’t believe the escalation in prices is because of the mortgage products. It is because of strong economic performance, strong consumer confidence and interest rates still being favourable.”

Bob Linney, a spokesman for the Canadian Real Estate Association, said there is no data to indicate new mortgage products are responsible for some of the rising prices in the real estate markets. “I don’t have the stats to back that up,” he said.

It is starting to look like a surge in new listings could put some downward pressure on prices. Nationally, new listings were up 3.4% from a year ago.

Red-hot real estate markets such as Saskatoon, where prices are up 56.4% from a year ago, saw listings surge by 65.9% from August, 2006. In Edmonton, prices are up 27.7% from a year ago, while listings are up 57.8%.

“I’m relieved to see the listing inventories coming up. It’s better for the consumer,” said Mr. Ash.

————————————————————————————————————

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