4 Nov

Condo in Crisis: What to Do if Your New Purchase Faces Receivership

Pre-Construction

Posted by: Michael Greene

Is Your Condo Project Facing Receivership?

Picture this: You’ve been excitedly waiting for your new condominium to be completed in just a few months. All day, you’ve been imagining how you’ll decorate it, learning about local shops, and planning your housewarming party. Then, suddenly, the builder stops sending updates. You turn on the news and discover that your condo project has gone into receivership.

This exact situation happened to one of my clients, someone I had been working with on other pre-construction purchases. Unfortunately, it’s becoming an all-too-common story as real estate receiverships increase across Canada.

But before you panic, let’s break down what this means for you.

Understanding Receivership: What It Means for Your New Condo

Receivership occurs when a secured creditor appoints a receiver to take control of a property, typically to sell it and recover the funds owed by the developer. A receiver is usually a property expert who steps in to manage the project’s finances and steer it back on track.

Think of receivership as a financial lifeline for a troubled project. If a developer can’t meet its debt obligations, a court appoints a receiver to take control of the situation. Receivership is serious and not every developer qualifies for it, but when granted, the receiver analyzes the project’s finances to determine whether it’s feasible to complete it. If the costs are too high, drastic measures may follow.

Types of Receivership

There are two types of receivers:

  • Court-appointed receiver: A court officer who must report to the court throughout the process. The receiver’s fees usually take 25% of the collected funds, plus expenses, paid by the judgment debtor.
  • Privately-appointed receiver: Appointed by a secured creditor, this type focuses on recovering debts.

One Example:

Last year, the Iconic “The One” skyscraper project at Yonge and Bloor in Toronto entered receivership due to $1.6 billion in unpaid debt. A court-appointed receiver took control after the developers defaulted. Today, construction continues, with an expected completion date in March 2025.

What Happens When Your Condo Goes Into Receivership?

When a condo project enters receivership, the future of pre-sale contracts depends on the receiver’s decision. They can either continue or cancel the project:

  • Continue: If the receiver chooses to proceed, existing agreements remain in effect.
  • Cancel: If the project isn’t financially viable, the agreements may be terminated. In this case, buyers might claim their deposits and potentially take legal action, but recovering funds can be difficult given the developer’s insolvency.

A receiver, not the developer, has the authority to sell the project to another builder or take control of the assets. They may also seek Debtor-in-Possession (DIP) financing, allowing the developer to remain in control while restructuring to complete the project.

DIP loans, though regulated and costly, give developers the funds and time to finish a project in receivership. These loans are more likely to be approved for developments in high-demand areas, as stopping construction in such locations reflects poorly on local governments.

Protecting Your Financial Interests

When you enter a new construction property agreement and provide a deposit, programs like Tarion in Ontario offer protection. According to Tarion’s website, protection applies if:

  • The builder goes bankrupt.
  • The builder fundamentally breaches the purchase agreement.
  • You have a statutory right to treat the agreement as terminated.

For freehold homes purchased after January 1, 2018, Tarion covers deposits up to $50,000 or 10% of the purchase price (to a maximum of $100,000 for homes over $600,000). Condo buyers enjoy extra protection under the Condominium Act, which mandates that developers hold deposits in trust.

Developers must also provide a Delayed Occupancy Warranty, ensuring your condo is ready for occupancy by a specified date. If the developer misses this deadline due to construction delays or receivership, they must compensate you. A PDF copy of the warranty can be downloaded here for your reference.

Steps to Take When Your Condominium Goes Into Receivership

If your condo goes into receivership, here are steps to safeguard your investment:

  1. Contact the Receiver
    Reach out to the court-appointed receiver to get updates on the project. They can inform you about the next steps.
  2. Review Your Purchase Agreement
    Carefully examine your contract for any clauses about delays, receivership, or deposit protection. This helps clarify your rights.
  3. Check for Deposit Protection
    Verify whether your deposit is covered by programs like Tarion, and file a claim if necessary.
  4. Consult Your Real Estate Lawyer
    A lawyer specializing in real estate or condominium law can guide you through your legal options, including deposit recovery or claims against the developer.
  5. Stay Informed
    Keep up with updates from the receiver. They may attempt to sell the project to another builder or secure additional financing to complete it.
  6. Prepare for Delays
    Be ready for significant delays or, in the worst case, the cancellation of the project.
  7. Understand the Possible Outcomes
    If the project continues, expect delays. If it is canceled, you may be eligible for a refund, though recovery amounts will vary based on the developer’s financial state.
  8. Consider Legal Action for Damages
    In rare cases, buyers may pursue additional damages beyond their deposits. However, this depends on the developer’s solvency and the available assets.

To Sum It All Up

Receivership is often a temporary measure, aimed at getting the project back on track. While dealing with a property receivership can be overwhelming, staying informed, seeking legal advice, and understanding your rights can help protect your investment. Whether the project moves forward or gets canceled, having a clear plan will ensure you’re ready for whatever comes next.

If your condo project is in receivership or you have questions about real estate investments, reach out to Mortgage With Mike today. Our team is here to help you through every step of the process, protecting your financial interests. Schedule your free, no-obligation 15-minute consultation now!

3 Nov

Boost Your Income and Property Value with The Secondary Suite Refinance Program

Refinancing

Posted by: Michael Greene

Ontario’s New Secondary Suite Refinance Program is designed to expand the availability of affordable housing by offering financial aid to homeowners interested in adding secondary suites. These suites, commonly referred to as accessory dwelling units (ADUs), can be a great asset to your property, providing extra income while helping address the housing shortage.

Program Highlights

The Secondary Suite Refinance Program provides several important benefits to qualifying homeowners:

  • Up to $40,000 in forgivable loans, covering 50% of the costs to build new secondary suites.
  • Homeowners can now refinance up to 90% of their home’s value, including the potential value of the secondary suite they plan to build. This allows them to borrow a larger sum of money by tapping into the increased value of their property.
  • The refinanced mortgage can be amortized over a period of up to 30 years, making monthly payments more manageable for homeowners. This longer amortization period spreads the loan out over a longer time, reducing financial strain.
  • To ensure that homeowners across all regions can take advantage of the new regulations, the government has increased the mortgage insurance limit to $2 million. This applies to those who are refinancing specifically to build a secondary suite, providing flexibility for homeowners in higher-priced housing markets.
  • Supports the creation of basement apartments, laneway houses, and garden suites.
  • Encourages affordable rentals by requiring units to be rented below market rates.
  • Promotes accessible housing by providing support for building suites that cater to seniors and people with disabilities.

Who Can Apply

To be eligible for the Secondary Suite Incentive Program, homeowners must meet the following conditions:

  • Must be the registered owner and occupy the property as their main residence.
  • Have a combined annual income of less than $209,420 for all property owners.
  • The property’s assessed value must be below the homeowner grant threshold (set at $2.15 million in 2024).
  • Acquire all necessary building permits from local authorities before starting construction.
  • Rent out the unit at a rate below the market average for a minimum of five years to receive loan forgiveness.

How to Apply

Follow these steps to successfully apply for the Secondary Suite Incentive Program:

  1. Assess Your Property: Evaluate the potential for adding a secondary suite and consult local zoning regulations to ensure compliance.
  2. Secure Funding: Explore financing options to ensure you can cover your portion of the construction costs.
  3. Obtain Permits: Submit the necessary permit applications to your local municipality, ensuring your plans meet all zoning and building code requirements.
  4. Submit Your Application: Complete the program’s application form, providing all required documents, including income proof, property ownership details, and building permits.
  5. Build the Suite: Once your application is approved, begin construction. Ensure all work is inspected and meets required standards.
  6. Rent the Unit: Upon completion, rent the suite at the below-market rate for at least five years to qualify for loan forgiveness.

What is a secondary suite?

A secondary suite is a self-contained living space located within a single-family home or on the same property. It typically includes its own separate entrance, kitchen, bathroom, and living areas, making it independent from the main household. These suites are often referred to as basement apartments, in-law suites, or granny flats.

Secondary suites can be created by converting existing spaces, such as basements, garages, or attics, or by building a new structure like a coach house or laneway home on the property. They provide additional housing units within a residential area and can be rented out to generate extra income or used to accommodate family members, such as elderly parents or adult children.

In many cities, the construction of secondary suites is regulated by local bylaws, which specify requirements such as minimum size, zoning, and safety standards. These units are increasingly popular as a solution to housing shortages and as a way for homeowners to make more efficient use of their properties.

Secondary Suite

Primary unit and secondary unit examples.

Why Build a Secondary Suite?

There are several benefits to adding a secondary suite to your property:

  • Extra Income: Generate rental income to help with your mortgage or other expenses.
  • Boost Property Value: Increase your home’s value by adding a rentable unit.
  • Contribute to Affordable Housing: Help provide affordable housing options within your community.
  • Housing Flexibility: Use the unit to accommodate family members, like elderly parents or adult children, while maintaining privacy.

Questions to ask when Considering Building a Rental Suite?

Is there demand for rental housing in your neighborhood?

Have you researched how much it will cost to build your suite?

Have you spoken to your lender about financing options?

Can you afford to build a suite, even if there are delays or additional costs?

Can you meet all zoning requirements?

Can you meet all building code requirements?

Do you want to be a landlord and rent the suite out long-term?

Can you afford the mortgage or loan payments if the suite is not rented for a few months?

Conclusion

The Secondary Suite Incentive Program in Ontario provides a valuable opportunity for homeowners to improve their financial situation while making a positive impact on the community. By understanding the program’s requirements and following the application steps, you can successfully develop a secondary suite that benefits both your family and the wider community.

 

Thinking of taking on a project like this?

Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

18 Oct

Federal Housing Measures Support Secondary Suites, Vacant Land Taxes, and More Homes on Public Lands

Latest News

Posted by: Michael Greene

On Tuesday of last week, the federal government announced some new housing measures that are aimed at helping homeowners, especially those looking to add a little extra income with secondary suites, while also tackling some of the bigger housing challenges Canada is facing. We’re talking new taxes, refinancing options, and plans to repurpose underused federal properties. So, let’s dive into what all this means for homeowners like you.

Easier Refinancing for Secondary Suites

If you’ve ever thought about turning that empty basement or unused garage into a rental suite, this one’s for you. One of the most exciting changes is the recent municipal zoning reform that makes it easier to refinance your mortgage to fund these kinds of projects. This is made possible through Housing Accelerator Fund agreements.

Here’s the deal: you can now access up to 90% of your home’s value, including the value of that future rental suite, through refinancing. This means more cash in hand to get your renovations going!

On top of that, you can now stretch the loan out over 30 years. Longer amortization = lower monthly payments, which is always a win. Oh, and if you’re worried about mortgage insurance limits holding you back, don’t be. The government has bumped the mortgage insurance limit up to $2 million, so homeowners in pricier markets won’t get left behind.

As Deputy Prime Minister Chrystia Freeland said, “We’ve got to use every tool in the box to make housing more affordable for Canadians.” And this is definitely one of those tools!

Tax on Vacant Land to Spur Development

Now, onto the vacant land tax. If you’re sitting on some unused land, the government is about to give you a nudge to do something with it. The idea here is simple: introduce a tax on vacant land to push landowners into developing residential properties, instead of just letting the land sit there.

The feds are working with local governments to figure out how this could work in different areas. So, don’t be surprised if you start hearing more about it from your local city hall.

To take advantage, Canadians can participate in consultations with municipalities and the federal government to help shape the implementation of vacant land taxes, ensuring fair regulations while incentivizing new development in local communities.

Repurposing Federal Properties for Housing

Last but not least, the government is making more federal properties available for housing development. We’re talking about 14 new properties, from places like Ottawa to Cape Breton. These properties will join the Canada Public Land Bank, which already has 70 spots ready to be turned into homes.

Public Services and Procurement Minister Jean-Yves Duclos summed it up nicely: “We’re unlocking public lands for housing at a pace we haven’t seen in generations.” Translation: they’re serious about tackling the housing crisis and creating more affordable housing options across the country.

In conclusion, the federal government’s new housing measures represent a significant step towards addressing Canada’s housing challenges. By making it easier for homeowners to build secondary suites, taxing vacant land to encourage development, and unlocking federal properties for housing, these initiatives aim to increase housing supply, improve affordability, and create stronger communities. For homeowners, these changes provide new opportunities to maximize their property’s potential, generate additional income, and contribute to the solution for Canada’s housing crisis. Together, these measures reflect a proactive approach to making housing more accessible and affordable for Canadians, now and in the future.

As we continue to navigate this unpredictable journey of interest rates, our commitment to your financial success remains steadfast. Whether rates rise or fall, the Bank of Canada rate cut impact on mortgages will influence your decisions. Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions in this evolving landscape. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

1 Oct

Boldest Mortgage Reforms in Decades Set to Unlock Homeownership for All Canadian First-Time Homebuyers and Buyers of New Builds

First-Time Homebuyers

Posted by: Michael Greene

These mortgage reforms, touted as the boldest in decades, aim to unlock homeownership for all Canadian first-time homebuyers and buyers of new builds by address housing affordability and ease the path to securing to homeownership. In an effort to making it easier to qualify for a mortgage, significant reforms are being introduced across Canada, specifically targeting first-time homebuyers and buyers of newly constructed properties. These mortgage reforms represent a transformative shift and aim to expand access to mortgage options, increase affordability, and stimulate the housing market.

New Mortgage Reforms is Expanding Eligibility from 25- Year to 30-Year Mortgage Amortization

A major highlight of these mortgage reforms is the expansion of 30-year mortgage amortizations for all first-time homebuyers and those purchasing newly built homes. This measure will provide more flexibility for borrowers who need high loan-to-value mortgage insurance. Under the current rules the first-time buyers and buyers of new builds applying for an insured mortgage have to qualify using 25-year amortization.

To qualify under the new reform, borrowers must meet the following criteria:

  • The total loan-to-value ratio must be 80% or more.
  • The borrower must either be:
    1. A first-time homebuyer, or
    2. Purchasing a newly constructed home.

 

Definition of a First-Time Homebuyer

Under this reform, a first-time homebuyer is defined as someone who meets at least one of these conditions:

  • The borrower has never purchased a home before.
  • In the last four years, the borrower has not lived in a home that they or their spouse/common-law partner owned.
  • The borrower has recently experienced a breakdown in a marriage or common-law partnership, similar to the rules used in the Canada Revenue Agency’s Home Buyers’ Plan.

Definition of a Newly Constructed Home

A property will be classified as a newly constructed home if it has not been previously occupied for residential purposes. Importantly, newly constructed condominiums with an interim occupancy period will still qualify.

The New Mortgage Reforms will Raise the Insured Mortgage Price Cap From $1 Million to $1.5 Million

In response to the rising cost of homes in Canada, the price cap for insured mortgages will increase from $1 million to $1.5 million. This change applies to borrowers requiring high loan-to-value mortgage insurance and is expected to benefit buyers in competitive housing markets.

To qualify for this new price cap, borrowers must adhere to these conditions:

  • The loan-to-value ratio must be 80% or higher.
  • The residential property’s value must be less than $1.5 million.
  • Down payment requirements are structured as follows:
    • 5% on the portion of the purchase price up to $500,000.
    • 10% on the portion between $500,000 and $1.5 million.

When Will the Mortgage Reform Measures Take Effect?

These groundbreaking reforms will take effect for mortgage insurance applications submitted to mortgage insurers like CMHC on or after December 15, 2024. Importantly, these measures will only apply to high loan-to-value mortgages on homes occupied by the borrower or a close family member. All other existing eligibility criteria for government-backed mortgage insurance will remain unchanged.

Advocacy for Housing Affordability

As these new measures roll out, organizations such as Mortgage Professionals Canada (MPC) will continue advocating for policies that make homeownership more attainable. By supporting reforms like these, MPC aims to put more money back into Canadians’ pockets, improve housing affordability and accessibility, and maintain high standards within the mortgage industry.

This reform package marks the boldest effort in decades to unlock homeownership for all Canadian first-time homebuyers and buyers of new builds, and is expected to have a lasting impact on Canada’s housing market.

Easing Mortgage Accessibility for Canadian First-Time Homebuyers

With skyrocketing home prices and stringent lending rules, many first-time buyers have been left on the sidelines. However, the latest reforms bring a fresh perspective, designed specifically to unlock opportunities for this demographic. By expanding qualification criteria and reducing the stress test burden, these changes aim to boost accessibility to mortgage financing, especially for those entering the housing market for the first time.

Unlocking Homeownership for Buyers of New Builds

One of the standout features of the recent reforms is the attention given to buyers of new construction homes. Previously, buyers of new builds faced unique challenges in financing, often tied to the unpredictability of construction timelines. Under the new regulations, buyers of new homes will have greater flexibility in mortgage terms and pre-approvals, making it easier to secure financing without the fear of delays or unexpected costs.

Long-Term Impacts of the Bold Mortgage Reforms

These reforms are poised to have long-lasting effects on the Canadian housing market, particularly in urban areas where demand for affordable housing is high. Check out Wowa for in-dept stats. By simplifying mortgage qualification and offering more flexible financing options, the government hopes to stimulate both supply and demand, leading to increased construction of new homes while helping first-time homebuyers overcome financial barriers.

A Path Forward for All Canadian Buyers

Whether you are a first-time homebuyer or looking to purchase a newly built home, these bold mortgage reforms promise to unlock new possibilities. With more accessible mortgage options and a clear focus on affordability, Canada’s housing market is on the verge of becoming more inclusive for all buyers.

Final Thoughts: Seizing the Opportunity for Homeownership

The boldest mortgage reforms in decades have created a golden opportunity for Canadian first-time homebuyers and buyers of new builds to finally achieve their homeownership dreams. These changes not only make mortgages more accessible but also pave the way for more affordable housing options across the country.

If you’ve been waiting for the right moment to buy your first home or secure financing for a new build, now is the time to act. Don’t let this opportunity pass you by!

Ready to Unlock Your Dream Home?

Contact us today to learn how these bold new mortgage reforms can help you take the next step toward homeownership. Whether you’re a first-time buyer or interested in a new build, Mortgage with Mike is here to guide you through the process.

Get in touch with us today and unlock your path to homeownership!

2 Sep

How Ontario’s New Planning Statement Could Impact Toronto Housing Prices and Development

Latest News

Posted by: Michael Greene

At a recent conference hosted by the Association of Municipalities of Ontario, minister of municipal affairs and housing Paul Calandra introduced the new Provincial Planning Statement, addressing Toronto housing market impact. He emphasized that this update provides municipalities with greater tools and flexibility, allowing them to better address their unique local challenges and priorities in housing development.

“This will ensure a consistent planning approach across the province,” Calandra stated. “Municipalities understand local needs best, particularly when it comes to addressing the rapid growth we’re experiencing in Ontario.”

This announcement comes as Ontario struggles to keep pace with its ambitious housing goals. The province is committed to building 1.5 million homes by 2031, but the current rate of construction is falling short. Despite efforts to meet annual targets, including counting long-term care beds in the totals, only a small number of municipalities are on track to meet their goals.

Calandra pointed to external challenges, such as global economic uncertainty and rising interest rates, as factors affecting housing starts. However, he assured that the new planning statement lays the groundwork for a sustained building boom as economic conditions improve.

One notable change in the updated statement is a significant reduction in complexity—trimming the document by 100 pages and 30,000 words. This streamlined approach is designed to make it easier for municipal planners to navigate and apply the rules, particularly in areas designated for housing, industry, and agriculture.

Additionally, the new statement encourages the development of more homes near major transit stations and on underutilized low-density areas, such as shopping plazas and malls. This focus aims to better utilize available land and accommodate the growing population in a more efficient manner.

The province has been consulting with stakeholders for several months on these changes. However, some groups, such as Environmental Defence, have raised concerns that the new planning approach could lead to increased low-density sprawl, which may not align with sustainable development goals.

Toronto housing market impact?

The new Provincial Planning Statement could have several significant impacts on housing in Toronto:

  1. Increased Flexibility for Toronto’s Housing Development: With greater autonomy granted to municipalities, Toronto could tailor its housing strategies to better meet local needs. This means more responsive planning to address specific challenges, such as affordability, density, and the demand for various types of housing.
  2. Focus on Transit-Oriented Development: The updated statement emphasizes building more homes near major transit stations. For Toronto, this could lead to increased development around transit hubs, making it easier for residents to access public transportation and reducing reliance on cars. This approach could lead to the creation of more vibrant, walkable communities.
  3. Utilization of Underused Lands: The push to develop underutilized low-density areas, like shopping plazas and malls, could open up new opportunities for housing in Toronto. This might mean the redevelopment of existing commercial areas into mixed-use developments that include residential units, potentially easing the pressure on housing supply.
  4. Streamlined Planning Process: The simplification of the planning rules could speed up the approval process for new housing projects in Toronto. This could help alleviate the housing shortage by getting projects off the ground more quickly, especially as the city strives to meet its share of the province’s 1.5 million homes target.
  5. Potential for Low-Density Sprawl: While the statement aims to promote more housing, there’s a concern that it might lead to increased low-density sprawl, even within Toronto. This could have implications for sustainable development, potentially conflicting with the city’s goals of increasing density and reducing environmental impact.

In summary, the new Provincial Planning Statement is likely to accelerate housing development in Toronto, particularly in areas with good transit access and underutilized land. However, the long-term effects on affordability, density, and sustainability will depend on how the city implements these changes and balances growth with its existing urban planning goals.

 

How will this affect pricing?

The new Provincial Planning Statement could influence housing prices in Toronto in several ways:

  1. Increased Supply May Stabilize Prices: By encouraging more housing development, particularly in underutilized areas and near transit hubs, the new planning policies could help increase the supply of homes in Toronto. If the supply of housing rises significantly, it could help stabilize or even lower prices, particularly in areas where demand is high.
  2. Development in High-Demand Areas: Building more homes near transit stations and redeveloping commercial areas could increase the value of these properties, making them more desirable. This could lead to higher prices in these newly developed areas, especially if the demand for these locations outweighs the supply.
  3. Potential for Higher Land Values: As more land is repurposed for residential use, particularly in low-density commercial areas, the value of this land could increase. Developers may pass these higher costs onto buyers, potentially leading to higher home prices in these newly developed areas.
  4. Short-Term Price Increases Due to Demand Outpacing Supply: In the short term, if the pace of construction doesn’t keep up with the growing demand, prices could continue to rise, especially in high-demand areas. This could be exacerbated by external factors such as high interest rates and global economic uncertainty, which might slow the pace of new developments.
  5. Potential for Long-Term Price Moderation: Over time, as the market adjusts to the increased supply of housing, prices could stabilize or moderate. However, this depends on the scale of new development and how quickly it can meet the growing demand in Toronto.

In summary, while the Provincial Planning Statement aims to boost housing supply, which could eventually moderate prices, Toronto’s housing market impact will depend on the speed and scale of new developments. In the short term, prices may continue to rise, particularly in high-demand areas, but increased supply over time could help ease these pressures.

What’s the next step?

The next step following the introduction of the new Provincial Planning Statement involves several key actions that will shape its impact on Toronto’s housing market:

  1. Municipal Implementation: Toronto’s municipal government will need to integrate the new planning guidelines into its local planning policies and zoning bylaws. This involves revising existing frameworks to align with the province’s directives, particularly around transit-oriented development and the utilization of underused lands.
  2. Stakeholder Consultation and Feedback: The city will likely engage with stakeholders, including developers, community groups, and residents, to gather input on how these changes should be implemented. This consultation process can influence how flexible or strict the new policies will be in practice, particularly concerning density and sustainability concerns.
  3. Development Proposals and Approvals: As the city adopts the new guidelines, developers will begin proposing projects that take advantage of the updated planning rules. This might include redeveloping shopping plazas into mixed-use areas or building new housing near transit stations. The speed at which these projects move through the approval process will be crucial in determining how quickly new housing comes online.
  4. Monitoring and Adjustments: The province and the city will likely monitor the impact of these changes on housing supply and pricing. If the new policies are not leading to the desired outcomes, such as sufficient new housing construction or affordable pricing, further adjustments may be needed. This could involve tweaking zoning regulations, offering incentives for affordable housing, or revising development targets.
  5. Public Communication and Education: It’s also important for the city and province to communicate these changes to the public. Homebuyers, homeowners, and investors need to understand how the new rules will affect their property values, housing options, and potential investments. Clear communication will help manage expectations and encourage informed decision-making in the housing market.

The next steps involve Toronto’s integration of the new planning guidelines, active consultation with stakeholders, and the initiation of development projects under the updated rules. The effectiveness of these steps will depend on how well the city balances growth with the need for affordable and sustainable housing options.

In conclusion, this new policy will replace the Provincial Policy Statement, 2020 and A Place to Grow: Growth Plan for the Greater Golden Horseshoe 2019, as amended in 2020, and give municipalities the tools they need to build more homes. Aligning builders and developers with incentives to get more projects off the ground. The vision, laws, policies, and process for land use in Ontario is ready to be put into action and this can be explored through the 2024 Provincial Planning Statement. Here you can Download the PDF of the Provincial Planning Statement.

As we continue to navigate this unpredictable journey of interest rates, our commitment to your financial success remains steadfast. Whether rates rise or fall, the Bank of Canada rate cut impact on mortgages will influence your decisions. Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions in this evolving landscape. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

1 Aug

New 30-Year Amortization Incentive for First-Time Home Buyers in Canada

General

Posted by: Michael Greene

Advocates are commending Ottawa’s Department of Finance decision to extend the amortization period on insured mortgages for some homebuyers, while suggesting that expanding this policy to all Canadians would enhance home ownership affordability.

During a speech in Toronto on Thursday, Finance Minister Chrystia Freeland revealed that the federal government will now permit a new 30-year amortization incentive for first-time home buyers of newly built homes. This policy will be effective from August 1.

Presently, if a down payment is less than 20% of the home’s price, the maximum amortization period allowed is 25 years.

Freeland acknowledged the housing challenges faced by young Canadians, stating, “With a lack of housing options and soaring rent and home prices, younger Canadians feel disadvantaged. Extending amortization will make monthly mortgage payments more manageable for those aspiring to own their first home.”

Lauren van den Berg, CEO of Mortgage Professionals Canada, praised the initiative as a positive development and emphasized that extending the amortization period will create more opportunities for first-time homebuyers and stimulate economic recovery. However, she argued for a broader application of the policy to include all homebuyers, not just those purchasing new builds.

Van den Berg pointed out that in regions like Greater Vancouver and Greater Toronto, where vertical construction is more common, new builds are less prevalent, thus necessitating a broader policy application.

Victor Tran, a mortgage and real estate specialist at Ratesdotca, expressed concerns about the limited impact of the policy due to its specific eligibility criteria, noting that insured mortgages for new builds are uncommon. Tran also highlighted that many properties in high-cost areas such as Vancouver and Toronto exceed $1 million, leading buyers to opt for uninsured mortgages.

Conversely, Kevin Lee, CEO of the Canadian Home Builders’ Association, deemed the announcement transformative, arguing that longer amortization periods would aid affordability and encourage more construction. Lee noted this policy could also assist in meeting the government’s objective of building 5.8 million new homes in the next decade and alleviate the rental market by transitioning renters into homeowners.

In addition to the amortization changes, Freeland announced an increase in the amount first-time homebuyers can withdraw from their RRSPs, raising it from $35,000 to $60,000, effective April 16, coinciding with the federal budget release. This change reflects the growing size of down payments and the longer time required to save for them. Individuals who have made or will make withdrawals between January 1, 2022, and December 31, 2025, will now have up to five years to begin repayment, instead of two.

These amendments are designed to complement the First Home Savings Account, introduced last year, which allows prospective homebuyers to save up to $8,000 annually with a lifetime limit of $40,000. To date, over 750,000 Canadians have opened an FHSA since it became available last year.

Ottawa also announced modifications to the Canadian Mortgage Charter, including provisions for permanent amortization relief for eligible homeowners, allowing them to reduce their monthly mortgage payments to a more affordable level indefinitely.

As we continue to navigate this unpredictable journey of interest rates, our commitment to your financial success remains steadfast. Whether rates rise or fall, the Bank of Canada rate cut impact on mortgages will influence your decisions. Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions in this evolving landscape. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

24 Jul

How the Bank of Canada Rate Cut Will Impact Your Mortgage?

General

Posted by: Michael Greene

Understanding the impact of the Bank of Canada rate cut on your mortgage is important.  In an increasingly complex mortgage market, one major factor influences many Canadians’ ability to own their homes: interest rates. The recent drop in the Bank of Canada’s (BoC) prime rate by 25 basis points to 4.5% has a significant ripple effect on mortgage costs, impacting both current homeowners and prospective buyers. In this blog, we’ll explore the intricate relationship between interest rates and mortgages, providing you with the insights you need to navigate this evolving landscape.

The Prime Rate and Its Wider Implications

Many Canadians believe that the Bank of Canada prime rate is the primary driver of mortgage interest rates across the country. However, mortgage interest rates—especially fixed rates—are influenced by a myriad of broader economic factors and trends. Notably, changes in the Band of Canada prime rate also affect the interest rates that banks and credit unions offer on savings accounts and other loans, including credit cards. When the prime rate shifts, mortgage lenders typically adjust their rates accordingly.

For instance, most lenders will raise their standard variable or decrease rates in line with any changes in the prime rate. Conversely, variable rate mortgages will adjust based on the prime rate. However, the most noteworthy recent change has been in the 5 year fixed-rate products, which have shown a notable decline after the BoC interest rate increases.

Bank of Canada Rate Cut Impact on Existing Mortgages

For current homeowners, a drop in the prime rate can directly impact monthly mortgage payments, particularly for those with variable or tracker-rate mortgages. The Bank of Canada rate cut impact on mortgages means that if your mortgage is linked to the prime rate, you might see a reduction in your payments, which can free up some financial space in your budget.

On the other hand, if you have a fixed-rate mortgage, your payments remain unchanged, providing stability in this fluctuating market. Fixed-rate mortgages allow homeowners to know exactly what their monthly payments will be for the agreed-upon term, protecting them from unexpected increases.

Interestingly, the recent drop in the prime rate has influenced fixed rates positively, with some lenders lowering their fixed-rate offerings, even though they remain higher than they were just a year or so ago. If your fixed mortgage is set to expire soon, it’s wise to explore your options for refinancing, as current rates might still offer a more favourable deal.

Taking Control of Your Mortgage Strategy

With the BoC’s prime rate now at a lower point, homeowners should take the opportunity to reassess their mortgage and overall financial strategy. Here are a few steps you can take:

  • Explore Fixed Rate Stability: If you’re currently on a standard variable rate or an adjustable rate mortgage, now might be an ideal time to consider switching to a fixed-rate mortgage. This could provide the stability and predictability you need in today’s market.
  • Balance Stability and Security: If you’re already in a fixed-rate mortgage, think carefully before making any changes. While these products offer security against rising rates, they can come with penalties for early repayment, which may limit your ability to take advantage of falling rates.
  • Forecast Your Financial Future: Consider your long-term financial goals and any potential changes in your life circumstances, such as career shifts, family growth, or home renovations. Aligning your mortgage strategy with your broader financial vision is crucial.
  • Unveil Alternative Options: Look into alternative mortgage products, such as reverse mortgages, which use your age and equity to give you a no payment option, or hybrid options that combine stability with flexibility.
  • Seek Expert Guidance: Navigating the mortgage landscape can be daunting, especially with recent changes. Our experienced team at Mortgage With Mike is here to help you understand the diverse range of mortgage options available to you.

Guiding Aspiring Homebuyers Through Bank Of Canada Rate Cut

For many Canadians, the most significant hurdle in becoming homeowners is saving for a down payment. However, fluctuating interest rates, particularly with the recent BoC adjustments, can also present new challenges. As lenders adjust their affordability criteria in response to rising living costs, it’s essential to understand how the Bank of Canada rate cut impact on mortgages might affect your borrowing capabilities. The most important factor to consider of qualifying is the stress test, which is measured by the mortgage debt ratios.

This is where expert advice becomes invaluable. A knowledgeable mortgage broker can help you assess your risk tolerance regarding interest rate changes and tailor a mortgage plan that aligns with your financial aspirations.

Navigating the Market: Practical Steps

As you navigate the dynamic mortgage landscape, here are some practical steps to consider:

  1. Stay Informed: Keep an eye on announcements regarding the prime rate. Our experts can help you interpret how these changes impact your mortgage.
  2. Review Your Mortgage Regularly: Conducting regular reviews of your mortgage can help identify opportunities to adjust your financial strategy. Sometimes, it may be worthwhile to pay a fee to exit an existing mortgage if you can secure a better rate.
  3. Consult Experts: For potential homeowners, seeking expert advice is crucial. Our website offers tools like a mortgage calculator to help you understand how rate changes will impact your monthly payments. Our team can guide you on how these shifts influence your borrowing capacity.
  4. Consider Your Future: Major life events can significantly affect your mortgage strategy. Always consider these factors in your decision-making process.
  5. Explore Mortgage Options: Don’t settle for the first mortgage option you encounter, especially when it’s time to remortgage. Explore various products to find the one that suits your needs best.

As we continue to navigate this unpredictable journey of interest rates, our commitment to your financial success remains steadfast. Whether rates rise or fall, the Bank of Canada rate cut impact on mortgages will influence your decisions. Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions in this evolving landscape. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

7 Dec

Top 5 Most Affordable Housing Market in Ontario

First-Time Homebuyers

Posted by: Michael Greene

When it comes to affordable housing there is only one questin that comes to mind. Where in Ontario can you currently get the most bang for your buck?

As the Ontario real estate market bounces back from the coronavirus pandemic, many homebuyers may think they may have missed out on the brief opportunity at the height of the public health crisis. In March and April, many of the province’s housing markets experienced modest price declines, offering discounts on detached, semi-detached, townhomes and condominiums.

Prices and sales quickly increased again through the summer in what proved to be a delayed spring market. However, that does not mean all of Ontario’s housing markets are out of range for first-time buyers, families, and newcomers when immigration to Canada eventually resumes its typical pace. With a little bit of due diligence, you can find a region or a city in the province that can present you with the property of your dreams.

DETERMINING AN AFFORDABLE HOUSING MARKET

First, it is important to understand what determines an affordable market. Contrary to popular belief, it goes beyond the average home price. An affordable market takes into account the level of income necessary to afford the purchase of a house, as well as the current home price. For example, the median income in London,ON is approximately $54,000 and the average home price is a little more than $440,000. This makes London an affordable market.

Here are the top five most affordable Ontario real estate markets to consider in 2021.

North Bay, ON

Home Price: $286,114 (CREA NOBA July 2020, year-to-date average price)

Income Required: $39,893

For a long time, homebuyers have overlooked northern Ontario in favour of its southern urban counterparts. Unlike other rural areas, access to typical amenities is not as easy and development is more limited compared to the rest of the province. That said, real estate sales have been climbing in cities like North Bay, possibly because of greater infrastructure investment, improved land development, and lower taxation. With the combination of incredibly affordable homes and the increased flexibility of telecommuting employees, this trend is likely to continue through the rest of 2020.

Sudbury, ON

Home Price: $297,938 (CREA SUD June 2020, year-to-date average price)

Income Required: $33,749

When Sudbury witnessed an uptick in confirmed COVID-19 cases, officials were forced to implement strict safety measures for people buying and selling their homes. That did not stop real estate activity in the area as home sales have been on the rise – and for good reason. Sudbury is one of the province’s most affordable cities to live in in Ontario. As more people exit the big cities amid the work-from-home trend, cities such as Sudbury have a become a prime location for families looking to move, offering more space and an affordable cost of living.

Windsor, ON

Home Price: $383,521 (CREA WIND July 2020, year-to-date average price)

Income Required: $52,192

Windsor is one of Ontario’s best-kept secrets. You can purchase a large property for the average price of a one-bedroom apartment in Toronto, and many young couples are following the smell of savings! The Windsor housing market continued to sizzle even during the coronavirus pandemic, and now that the city has joined the rest of the province by officially moving into stage three or reopening, this boom is expected to intensify. CBC News writes:

“In addition to the lower housing prices… Windsor makes it an attractive city to buyers and investors because of its close proximity to Detroit, low traffic, relatively warm weather and views, the casino, and the imminent construction of the Windsor-mega-hospital.”

Niagara, ON

Home Price: $493,007 (CREA STCA June 2020, year-to-date average price)

Home Price: $493,007 (CREA STCA June 2020, year-to-date average price)

The Niagara Home Builders’ Association (NHBA) said in Statistics Canada’s monthly survey of home builders that retirees and remote workers have amplified demand for new housing in the Niagara region, which elevated prices by one percent last month.

“As working from home becomes more prevalent, we may see an increase in the demand for larger living spaces that single-family homes can offer, causing a shift in demand from condominium apartments towards single houses,” the NHBA noted in the monthly survey.

Peterborough, ON

Home Price: $505,998 (CREA PETE July 2020, year-to-date average price)

Income Required: $69,072

Sales activity has been strong in Peterborough and the Kawartha Lakes in the aftermath of the peak COVID-19 period. In April, residential home sales plummeted 58.1 per cent, but they have rebounded as much as 34.5 per cent since. The contributing factor has been GTA buyers fleeing the region and seeking homes in smaller, quieter cities like Peterborough. The problem? Not enough supply, says Chiarina Payne, president of Peterborough and the Kawarthas Association of Realtors, in an interview with MyKawartha.com.

With interest rates at historic lows and demand expected to remain healthy, residential prices in the region are expected to rise by three per cent by the end of 2020.

CONCLUSION

Ontario’s slogan is “Yours to discover,” but the concept is more than just a garnish on our license plates. There is a lot of the province that most people have yet to see, and this is important if you are searching for a property to purchase. For Ontario real estate hunters, Toronto is an ideal location but the cost of a Toronto home is unaffordable for many. Exploring or expanding your home search to other parts of the province is more doable than ever before: public transit routes are expansive, remote work is more common, and a lot of cities in Ontario offer comparable amenities to what you would find in Toronto or Hamilton. Ready to make the great escape from big city life? Time to start discovering Ontario real estate!

23 Jul

New Qualifying Rate for the Mortgage Stress Test

General

Posted by: Michael Greene

For the first time in three years, the Bank of Canada, on Friday lowered the qualifying rate from 5.34 percent to 5.19 percent.

A typical mortgage application is tested against this five-year benchmark rate or the qualifying rate plus two percent, depending on which one is greater. This slight decrease could make a big difference for many Canadians applying for a mortgage.

So, what does this mean you may ask, well let’s see!

Let’s take an example; Sally makes $60,000 a year and she is putting 20% down payment. Stress tested at 5.34%, Sally would qualify for a mortgage of about $278,651 versus stress tested at 5.19%, she would qualify for a mortgage of about $282,716. As you can see, Sally would now be able to qualify for an extra $4,000 of mortgage approximately.

This certainly won’t have a huge impact on mortgage approvals but it will give some much-needed relief. This could be looked at as an added bonus for first-time home buyers, and combined with the down payment assistance – this is great news.

In February 2018, home sales dipped to their lowest levels since 2012, this was due to the introduction of the stress test that was introduced in 2017.

Although the new five-year benchmark rate is certainly good news from some prospective buyers, it hasn’t really changed the system that much, Samantha Brookes, CEO of broker Mortgages of Canada, told CBC.

“Consumers are in this wait-and-see pattern — it’s still difficult to get into the market because that stress test is there.”

It’s also something that’s sparked much debate among groups like the Ontario Real Estate Association, the Toronto Real Estate Board (TREB), the International Monetary Fund, Canada Mortgage and Housing Corporation (CMHC), and even some economists.

On one side of the aisle are those like TREB who say that the rules need to be relaxed because so many are still locked out of the housing market as a result of the test’s strict qualification metrics. And on the other are those like the CMHC who say that doing so would be a “reckless myopia.”

The qualifying rate is used in the stress tests for both insured and uninsured mortgages, so this lower rate will make it easier for borrowers to qualify for a mortgage. These tests were set up to ensure the potential homebuyer can afford the mortgage payments.