(NC)—When purchasing a new or resale home, Ontario residents are willing to spend more money for a home that is energy efficient (39%), will retain its value (23%) and is built using environmentally friendly materials (15%), according to a recent Leger Marketing poll.

I have certainly noticed in my business that buyers are more interested in energy conservation, whether a home is rated ‘R2000‘ or not, etc. I have numerous conversations every day with people regarding the Mattamy homes that are built in a factory, which has it’s pros and cons according to many home inspectors I have talked with about this matter.

The survey, conducted on behalf of MasonryWorx, an association of Ontario’s leading masonry professionals, also reveals residents between the ages of 35-54 years are most likely to pay more for energy efficiency, along with residents of southwestern Ontario.

“Homebuyers looking for an energy efficient home should start by considering what materials are used to build it,” said Judy Pryma, president of MasonryWorx.

“Homes built with brick, block and stone offer superior energy savings because these materials help keep your home cool in summer and warm in winter, which means lower overall energy consumption.”

Survey respondents also indicated a good understanding of the many benefits of masonry, with 71% aware of the long life span, 72% aware of the fire resistance qualities, and 70% aware of the superior impact resistance offered by masonry products.

“Sellers hoping for a swift sale this summer may wish to emphasize the superior value of masonry products to entice buyers,” added Ms. Pryma.

Certainly, builders charge more for all-brick built homes, and buyers, when given the choice, seem to gravitate toward all-brick over vinyl siding. A lot of the time, the reason is just that ‘my Dad said no matter what else, we have to buy a brick home’. Perhaps Dad knew something after all.

More information about the energy efficiency of masonry products is available at www.masonryworx.com.

- News Canada

I receive lots of questions about things to do with purchasing or selling a home, so I thought I’d start a new section on my blog, entitles ‘You Asked’.

Today’s question comes from Fred:

Hi,

What are the 2 taxes on house purchase in ontario?

I am trying to figure out what is important. I was hoping you might be able to give me some insight. Any help would be appreciated. Thanks.

Sincerely,

Fred

Well, Fred, if you are purchasing a resale home outside of the City of Toronto, and you are a Canadian resident, there is only one direct tax on your purchase, and that is the Land Transfer Tax – you can find calculation tables here. You will also be paying GST on the lawyer’s fees and on some of the costs you will pay via your lawyer.

If you are purchasing a resale home in the City of Toronto, you will be paying the City’s Land Transfer Tax; you can find more information on it, including rates, rebate information, etc.

here

As to to the second part of your question, ‘ . . . . what is important?’, there are many other things to consider when buying a home, such as location, commuting time and distance, resale potential, how the home will fit your wants and needs, overall condition of the home, the neighbourhood, and lots more. If you’d like a no-obligation 30-minute consultation to discuss this, give me a call at 905-208-7002, or send me an email to chris@chrisnewell.com.

Thanks for the question Fred.

Beacon Score Basics for Mortgage Hunters

2/14/2009 by Canadian Mortgage Trends

Your Equifax Beacon Score tells lenders how much of a risk you are, and hence it determines how much you’ll pay for your next mortgage. So it’s important to know what affects it.

Beacon scores range from 300 to 900 (a perfect score). The average Canadian adult has a Beacon near 700.

Many people think you need to be in the 800′s to get great mortgage rates.

That isn’t the case. Only 11% of Canadians rank above 800, and it’s virtually unheard of to see a Beacon near 900. All you really need is 680-700 to get the best mortgage rates. Even 600 can get you a decent enough deal if you can prove income and haven’t had any delinquencies for at least a last year.

As of October 15, 2008, 600 is the minimum credit score for insured mortgages. That means you’ll need at least a 600 score to qualify for good rates on mortgages with less than a 20% down payment.

If your score is below 600, you’re what lenders call a “B” client (i.e. there’s issues with your credit that banks won’t like). 1 out of 5 Canadians are in this boat, but don’t despair!. Your credit can be fixed and there are still lenders willing to give mortgages to the credit challenged if you have a big enough down payment. We’ve seen deals get done with Beacons as low as 480!

Also keep in mind, the exact score needed depends on the type of mortgage you require. For example, mortgages for the self-employed, or for rental properties, often require higher scores.

Here’s a table showing the approximate effect of different Beacon scores on mortgage interest rates. This is based on our enecdotal experience and not empirical data. But it gives you a rough sense for how rates go up as your Beacon score goes down.

Assuming you want to improve your credit (and who doesn’t?) you should know how the Beacon formula is calculated. Here are the main criteria:

While no one knows the exact formula (except the inventor, Fair Isaac Corporation), Beacon scores are roughly based on:

Component	Weighting	Notes
Payment History	35%	Factors in the recency of, and number of, payments over 30 days late, collections, judgments, and bankruptcies. A single 30-day late payment can drop your score 15-20 points.
Current Debts	30%	Considers how much you currently owe (in absolute terms and compared with your credit limits), how many creditors you owe money to, and how much you could owe if you maxed all your available credit.
Age of Accounts	15%	The longer your accounts have been opened the better. You generally need at least three accounts over one year old.
Type of Credit	10%	Bank loans, credit cards, and revolving credit accounts all impact you differently.
Credit Enquiries	10%	Numerous credit applications in the past 12 months is a no no. This is a big benefit of mortgage brokers, who pull your credit only once for multiple lenders.

Besides the obvious (bankruptcies, judgments, etc.) the top Beacon killers are:

• Payments over 30-days late
• Maxing out credit cards (i.e. using over 70% of a high credit limit)

If you have a lot of maxed out cards, bring them at least below 70% of their limit (Below 50% is better. Below 30% is best). Your credit score can jump considerably in as little as a month.

The moral is, know your credit score and manage it carefully. Over 70-80% of Canadians have mistakes on their credit report. Don’t be afraid to check yours!

Over the last month or so, I’ve been asked this question by more people than at any other time in my career, so I thought I’d write about it here today, and then you can give me your feedback.

We are currently in an almost-perfect storm, as far as real estate investing is concerned; rates are crazy-low, prices are down, and there are lots of properties available in many areas. Combine this with the tougher qualifications to get a mortgage, and many would-be buyers are having to continue as renters. For investor financing, we can still get great mortgages, with only 5% downpayment.

These factors combine to make positive cash-flow an easy thing to accomplish.

Let’s look at one example property, a 7-unit plus 1 big apartment building in Kitchener. This property is offered for sale at $479,500, and has rental income of $3,375 per month if the big apartment is not owner-occupied. So, that’s $39,300 income from rents, and operating expenses of approximately $10,000 for insurance and utilities, leaving you $29,000 per year for debt service, vacancies, and repairs.

This property has had many major updates in last couple of years, including electrical panel, steel roof, asphalt, and new boiler, so there shouldn’t be any big-ticket items coming up in the near future.

On top of that, the tenants in this legal boarding house have been there for between 3 years and 35 years, so there is stability of income.

What would be the carrying costs with 5% down? Well, your mortgage payment will be approximately $2,138pm & property taxes will be $295 per month, for a total annual outlay of ($2,138 + $295) x 12 = $29,196. That’s a break-even opportunity!

If you put 10% down, you have a small positive cash flow every month.

OR, how about this one, in Cambridge:

6 apartments, 2 x 2-bedroom and 4 x 1-bedroom. Rental Income of $45,000; operating expenses of $9049 per year. Carrying costs are:

$1,663 mortgage, $350 property taxes = ($1,663 + $350) x 12 = $24,156 per year.

So, total carrying costs plus operating costs = $9,049 + $24,156 = $33,205.

Result = $11,795 positive cash flow per year.

I think it’s a good time to be a real estate investor. I do; will you?

For information on these, and lots of other excellent opportunities to put your money to work for you, give me a call at 905-208-7002 or send me an email to chris@chrisnewell.com

• Is it time to lock in your mortgage?
• Confidence in housing market a ‘good sign’: economist
• U.S. house construction rises in May

This Week’s Quotation:

“The only limit to our realization of tomorrow will be our doubts of today.” – Franklin D. Roosevelt (1882 – 1945)

This Week’s Highlights:

• Housing starts perk up
• It was the worst of times
• Is the end in sight?

WEEKLY ARTICLES OF INTEREST

Is it time to lock in your mortgage?

One mortgage broker seems to think so. Here’s why

Jas Grewal’s reaction to the recent runup in interest rates was to abandon a sweetheart of a variable-rate mortgage in favour of a safer, but more expensive, fixed-rate mortgage. Mr. Grewal, you should know, is a mortgage broker. A mortgage broker who sees the potential for much higher rates in the future. “read more….”

OTTAWA — Despite a stream of negative economic news, most Canadians who’ve recently bought a home have confidence in their decision, according to a survey by the Canada Mortgage and Housing Corporation. A national consumer survey released Tuesday said 90% of recent home purchasers believed that a house is a good long-term investment. Almost 70% of respondents also said they felt that this is a good time to buy a home.“read more….”

Construction of new homes in the United States jumped in May by the largest amount in three months, providing an encouraging sign that the nation’s deep housing recession was beginning to bottom out. The Commerce Department said Tuesday that construction of new homes and apartments jumped 17.2 per cent last month to a seasonally adjusted annual rate of 532,000 units. That was better than the 500,000-unit pace that economists had expected and came after construction had fallen in April to a record low of 454,000 units. “read more….”

“THIS WEEK’S HIGHLIGHTS”

Housing starts perk up

Housing starts showed welcome signs of improvement in May, rising to 128,400 annualized from April’s 117,600. The increase was broadly based across building types. Both urban singles starts and urban multiples starts rose 11.1% to 60.900 annualized and 46,900, respectively. Rural starts remained unchanged at 20,600 annualized units. The improvement was reasonably broad-based, with all regions posting gains except British Colombia. Ontario enjoyed the largest percentage gain, up 22%, with gains in the Prairies posting a 16.8% increase. Quebec and Atlantic Canada enjoyed more muted gains of 3.3% and 7.3%, respectively. British Columbia suffered a 5% decline in urban starts during May. The pick-up in starts is broadly in line with the forecast of an improvement during the latter half of the year compared to the weakness in the first half. It is expected that Canadian housing starts will average 141,000 in 2009 overall. As growth in the economy picks up in 2010, starts should improve modestly to 173,000, although this represents activity well below levels seen earlier this decade.

It was the worst of times

To be sure, the data reported for the first quarter of 2009 was dismal. Canada’s recorded its largest output loss since 1991, the U.S. economy registered its third consecutive quarterly decline with activity in the European and U.K. economies also shrinking substantially. To top it off, Japan’s economy shrank at a 15.2% annualized rate. In spite of the rash of bad news, investors gravitated toward the better news being reported. U.S. housing statistics showed stability in the pace of sales, the pace of job cuts moderated and consumer confidence picked up. In Canada, confidence rose as did the pace of home sales making the first quarter’s slump feel like old news. U.K. house prices have increased in two of the past three months, auto incentives appear to have put a bottom on sales and confidence has improved. Eurozone data proved a mixed bag with the unemployment rate hitting a 10-year high, but business confidence improving and order books growing. Investors took these reports as a signal that it is the beginning of the end for the Great Recession of 2009.

Is the end in sight?

The consensus is that the global recession began to lose momentum in the second quarter but still expect another round of negative growth rates to be reported. The global manufacturing ISM index recorded its fourth consecutive monthly increase in May and the services index averaged 45.3 in April/May, well above the first quarter’s 40.4. The levels remain unimpressive but signal a turnaround in sentiment, suggesting that the pace of contraction will be slower in the second quarter and that, if this trend persists, the global economy will likely be expanding in the second half of this year.