Budgeting for the Holidays

General Kim Stenberg 25 Nov

Be mindful with money this season! Along with holiday joy come holiday bills, to avoid a sleigh-size tab, plan ahead to save money and maximize the payoff.

ORDER ONLINE Avoid getting stuck in the hustle and bustle of holiday shoppers by ordering gifts online from your laptop or phone. The time you save can be put towards spending more time with friends and family.

BE THRIFTY Start early and keep an eye out for special sales. Many retailers have Black Friday and Cyber Monday deals to help you get a jumpstart on holiday shopping. Get inspired with coupons and get into the routine of flipping through flyers delivered to your home and online

TRUST YOUR BUDGET It keeps you on track during the rest of the year, so why not lean on it now? Starting the season with a plan and a maximum spending limit will help alleviate stress while shopping. There are plenty of free budget-tracking apps that connect right to your bank accounts and can be pulled out of your pocket for reference at any time – especially when you’re feeling overwhelmed at the mall.

GET CRAFTY Everyone appreciates the handmade touch in a gift, and DIY-ing this holiday can help you save money. There are wonderful options that can be found online, even for beginners. Examples include homemade wreaths, body scrubs, and fun photo scrapbooks that can be done alone or in a group, and you’ll end up with a gift that money can’t buy. If you’re not sure where to find these clever and cost-effective ideas, Pinterest is a great place to start.

GIVE THE GIFT OF TIME Instead of buying gifts, spend quality time with your friends and family while you give back to others. Sharing the experience and splitting the cost of hosting a dinner for a family in need will offset the cost of spending money on each person and double the amount of joy spread during the holidays. It feels good to pay in kind.

HOSTING A PARTY?

Think ahead: Start thinking about your ingredients early and keep an eye out for sales on nonperishable goods. By beating the holiday rush, you can afford more goodies for less.

BE RESOURCEFUL Hosting a large gathering? Ask each of your guests to bring a dish. This cost effective tip will act as conversation starter too.

EARN REWARDS A number of retailers offer cards where you can earn points toward future purchases, including entertainment.

CHOOSE WISELY Your time matters, so spend more of it with your guests and less of it in the kitchen. Pick a short and easy recipe that won’t cost a lot to make. Prepare as much as you can the morning or day before for a smoother hosting experience.

 

DLC Marketing Team

Canadian Inflation Hits 18-Year High

Latest News Kim Stenberg 17 Nov

Inflation Surge is No Need for Hysteria

StatsCanada today reported that consumer price inflation rose to 4.7% from year-ago levels in October, compared to 4.4% in September. This is in line with market expectations and is well below the US’s 6.2% pace reported for the same period. Inflation is rising all over the world, the direct result of extreme weather events and supply chain chaos generated the creaky reopening of economies around the world. With pent-up demand surging, delays in production and transportation have led to price hikes in many sectors. Extreme weather conditions have exacerbated these price pressures, driving up food, energy and other commodity prices. The pandemic and climate change are unprecedented exogenous forces and should not be compared to the inflation surge in the 1970s. Nor should we assume that traditional monetary tightening would ease these pressures unless we are willing to run the risk of recession.

Last month, prices rose in all eight major components on a year-over-year basis, primarily driven by the surge in gasoline prices, which spiked 47.1% from year-ago levels. Extreme drought, especially in China, led to a dearth of hydroelectric power and shortages in other energy sources such as coal and natural gas. The shift to oil for power generation boosts the cost of oil and gasoline. It also caused a domino effect in shortages of other essential materials that require intensive energy use in their production, such as fertilizer and aluminum. These feed into shortages of food and metal components that raise the price of many consumer goods. Combine this with disruptions at the ports, in trucking and on the rail lines. It is no wonder that increasing costs and excess demand are driving up consumer prices worldwide.

The question is, would central bank tightening reduce this kind of inflation. I doubt it. Instead, we are likely to see these pressures ease over time (see chart below). The problem is we have repeatedly underestimated the time it would take to work this all out, leading some to call for a quicker response by the Bank of Canada and the Fed, among other central banks, for fear that the inflation will become embedded.

Embedded inflation, caused by rising wages and inflation expectations, led to wage-price spiralling in the 1970s and early 1980s. In Canada, inflation remained high well into the early 1990s because of substantial federal and provincial budgetary spending. I do not believe we are anywhere near that reality today. To be sure, fiscal policy in response to the pandemic has generated extraordinary budgetary red ink, but price pressures today are not the result of budgetary actions.

Bottom Line

Market-driven interest rates have already surged and are reflected in the rise in fixed mortgage rates. Maintaining a steady overnight rate at its effective lower bound has kept the prime rate and variable mortgage rates stable at extremely low levels. Undoubtedly, these rates will rise in time. The Bank of Canada has been clear that it will occur soon than they initially thought. They are nervous about inflation and are now saying a return to the 2% target will not happen until the end of next year.

Just this week, senior leadership at the Bank has taken to the news waves to suggest we are getting closer to full employment. Traders are now betting that the overnight rate target will rise 1.5 percentage points in 2022, beginning in April. Rates will increase, but we are not on the precipice of runaway inflation.

Dr. Sherry Cooper – Chief Economist, Dominion Lending Centres

 

 

Canadian Home Sales Surge in October

Latest News Kim Stenberg 15 Nov

Today the Canadian Real Estate Association (CREA) released statistics showing national existing-home sales rose a whopping 8.6% in October, its most robust month-over-month pace since July 2020, when the first lockdown eased briefly. This was on the heels of a modest uptick in September–the first gain since March of this year.

Sales were up month-over-month in about three-quarters of all local markets and in all major cities.

The actual (not seasonally adjusted) number of transactions in October 2021 was down 11.5% on a year-over-year basis from the record for that month set last year. That said, it was still the second-highest ever October sales figure by a sizeable margin.

On a year-to-date basis, some 581,275 residential properties traded hands via Canadian MLS® Systems from January to October 2021, surpassing the annual record of 552,423 sales for all of 2020.

“2021 continues to surprise. Sales beat last year’s annual record by about Thanksgiving weekend, so that was always a lock, but I don’t think too many observers would have guessed the monthly trend would be moving up again heading into 2022,” said Shaun Cathcart, CREA’s Senior Economist. “A month with more new listings is what allows for more sales because those listings are mostly all still getting gobbled up; however, with demand that strong, the supply of homes for sale at any given point in time continues to shrink. It is at its lowest point on record right now, which is why it’s not surprising prices are also re-accelerating. We need to build more housing.”

The basic story hasn’t changed, even with the rise in fixed mortgage rates: Housing demand remains well more than supply. Inventories of unsold properties are at historic lows. While the Trudeau government promised to address the massive supply shortage, in reality, housing construction is under the auspices of provincial and local government planning and zoning bodies. Moreover, the resurgence of immigration will widen the excess demand gap for homes to buy or rent.

New Listings

The number of newly listed homes rose by 3.2% in October compared to September, driven by gains in about 70% of local markets. With so many markets starved for supply, it’s not surprising to see sales go up when new listings rise.

As of October, about two-thirds of local markets were seller’s markets based on the sales-to-new listings ratio is more than one standard deviation above its long-term mean. The sales-to-new listings ratio tightened again last month to 79.5% compared to 75.5% in September and 73.5% in August. The long-term average for the national sales-to-new listings ratio is 54.8% (see chart below).

There were just 1.9 months of inventory on a national basis at the end of October 2021, down almost half a month from three months earlier and back in line with the all-time lows recorded in February and March of this year. The long-term average for this measure is more than five months.

Home Prices

In line with some of the tightest market conditions ever recorded, the Aggregate Composite MLS® Home Price Index (MLS® HPI) accelerated to 2.7% on a month-over-month basis in October 2021.

The non-seasonally adjusted Aggregate Composite MLS® HPI was up 23.4% on a year-over-year basis in October, a more significant gain than in the three previous months.

Year-over-year price growth in B.C. has crept back above 20%, though it is lower in Vancouver, on par with the 20% provincial gain in Victoria, and higher in other parts of the province.

Year-over-year price gains are in the mid-to-high single digits in Alberta and Saskatchewan, while they are currently at about 10% in Manitoba.

Ontario saw year-over-year price growth closing in on 30% in October, with GTA surging forward. Greater Montreal’s year-over-year price growth remains at a little over 20%, while Quebec City is now at 13%.

Price growth is running a little above 30% in New Brunswick (a little higher in Greater Moncton, a little lower in Fredericton and Saint John), while Newfoundland and Labrador is now at 10% year-over-year (a bit lower in St. John’s).

Bottom Line

Canada continues to contend with one of the developed world’s most severe housing shortages. As our borders open to a resurgence of immigration, excess demand for housing will mount. The impediments to a rapid rise in housing supply, both for rent and purchase, are primarily in the planning and approvals process at the municipal level. Liberal Party election promises do not address these issues.

Inflation pressures are mounting everywhere. The US just posted a year-over-year inflation rate for October at 6.2%–higher than expected. This Wednesday, Canada’s CPI data will be released. We saw a y/y inflation rate of 4.4% in September. Undoubtedly, the October data will surpass that level. Maybe that is why Tiff Macklem wrote an op-ed in the Financial Times today reiterating that the Bank of Canada is getting closer to raising interest rates as slack in the economy dissipates. This is in line with the hawkish BoC policy statement last month.

“For the policy interest rate, our forward guidance has been clear that we will not raise interest rates until economic slack is absorbed,” Macklem wrote. “We are not there yet, but we are getting closer.”

According to Bloomberg News, Macklem reiterated that the Bank of Canada’s view is still that recent inflationary pressures will ease. Yet, he acknowledged that a high level of uncertainty remains. “Supply disruptions appear to be lasting longer than we thought, and energy price increases are adding to current inflation rates,” he wrote.

“While our analysis continues to indicate that these pressures will ease, we have taken them into account for the dynamics of supply and demand,” Macklem said. “What our resolve does mean is that if we end up being wrong about the persistence of inflationary pressures and how much slack remains in the economy, we will adjust.”

 

Dr. Sherry Cooper – Chief Economist, Dominion Lending Centres

Quick guide to your best short-term financing options

General Kim Stenberg 15 Nov

Short-term financing – credit or loans that are designed to be paid off in a short period of time – can be a useful financial tool in a variety of different situations, such as:

Bridge financing

If you’re planning on moving and have found a new home before selling your existing one, you may need a short-term loan to make a down payment on the new place.

Seizing an investment opportunity

If an opportunity arises, a quick injection of cash will enable you to take advantage of it.

Consolidating debt

If you have multiple different loans, you can consolidate them into one single loan if you find one with a lower interest rate.

Covering unexpected expenses

Accessing some short-term cash will let you cover unplanned expenses, such as paying off medical bills or helping out an adult child during a period of unemployment.

But what are the different types of short-term financing options? And how do you know which are right for your situation?

 

Short-term financing options

Home Equity Line of Credit (HELOC): A HELOC is a revolving line of credit secured against your home, typically allowing you to borrow up to 80% of your home’s value.

Pros:

  • Interest rates are typically low.
  • You have flexibility over when you pay it off.
  • You can access portions of the approved sum at different times.
  • You therefore only pay off and pay interest on the amount you access.

Cons:

  • Retirees can find it hard to qualify, particularly if they don’t have a regular income or a strong credit score.

Private Loan or Mortgage: These are loans which typically have a period of one year.

Pros:

  • They’re usually fairly easy to qualify for if your home has enough equity.

Cons:

  • Set-up fees and interest rates are typically high.

Short-Term Installment Loan: These are loans in which set amounts are repaid at regular intervals for the term of the loan.

Pros:

  • You pay it off in installments rather than all at once.

Cons:

  • Unlike a credit card or line of credit, you can’t access portions of the approved sum at different times.
  • They can include hidden prepayment fees.

Payday Loan: A payday loan is a short-term loan characterized by very high interest.

Pros:

  • Usually easy to qualify for.
  • You can often access them even if you have a bad credit score.

Cons:

  • Interest rates are extremely high – often exceeding 300% over a year.

Convertible Mortgage: These are short-term mortgages, typically six months, with a fixed interest rate.

Pros:

  • They can be switched to a long-term mortgage if you choose.

Cons:

  • They usually have a higher interest rate than adjustable rate loans.

Cross Collateralization: This is when the collateral of one loan, such as a car, is used to secure another loan you have with the same lender.

Pros:

  • Interest rates can be lower.

Cons:

  • The lender may keep you from selling the asset being used as collateral, even if you have paid it off.

A New Short-Term Financing Option: CHIP Open is a new, short-term financing product offered by HomeEquity Bank. It’s a reverse mortgage which allows you to access up to 55% of the value of your home in tax-free cash. However, unlike a traditional reverse mortgage, there are no prepayment fees, meaning you can pay off the full amount whenever you like.  *Only available for Canadians aged 55+.

Pros:

  • Easier to qualify for than other short-term products since its not based on income or credit rating.
  • No monthly repayments.
  • Interest rate and fees are highly competitive in the short-term lending space.
  • If you decide you need a longer-term solution, you can switch to the CHIP Reverse Mortgage at a lower interest rate.

Cons:

  • Only available for Canadians 55+.
  • You must own your home.
  • Interest rates are higher than the regular CHIP Reverse Mortgage, allowing us to completely waive any prepayment penalties.

If you’d like to find out more about how CHIP Open can help you with your short-term financing needs, contact me today.

 

Source: HomeEquity Bank

Renewing Your Mortgage

Mortgage Tips Kim Stenberg 14 Nov

Did you know? Close to 70 percent of mortgages never make it to the end of their term! This means that, for a variety of reasons, homeowners are ending their mortgages early. However, that still leaves a solid 30 percent of home buyers who keep their mortgage until the term is up and it is time to renew!

If you are not planning to move in the near future and are happy with your current mortgage, you are likely one of the 30 percent who will renew once the term ends. So what does this process look like?

When it comes time to renew your mortgage, most lenders will send you a renewal letter when there is around 3 months remaining on your term. While nearly 60 percent of borrowers simply sign and send back their renewal without ever shopping around for a more favourable interest rate, this is actually the best time to check out your options.

Most standard terms are 5-year terms and, with that much time having passed since signing, the market rates could be very different once the term is up! Despite this, lenders tend to provide higher rates on renewals versus new clients as they are hoping that the ease of renewal will prevent you from seeking out new rates. However, shopping around for a better rate is not as difficult as it sounds – especially with the help of a mortgage broker – and it could end up saving you a couple hundred dollars a month (depending on your situation)! Ideally, you should be keeping track of your own mortgage term end date as shopping for a new rate between four and six months before your expiry will ensure you are able to find the most affordable option for you.

After shopping around, you may find that your bank is actually offering a great rate – in which case you can simply submit the renewal! But if you are able to seek out a lower rate, we promise you will thank yourself for putting in the effort to find out! As another point of interest, renewal time is also a great time to make an extra payment on your mortgage, if you are able!

Beyond renewing your mortgage, home owners also have the option to transfer or switch the mortgage. This can be done any time during the term of the mortgage but may have penalties associated with breaking the mortgage before the term is up. Transferring to another lender is generally done to get a better rate, but you will need to go through the entire mortgage process again – including the ‘stress test’ – which makes shopping around at renewal time an even smarter option.

If your mortgage is coming up for renewal and you want to find out what lower rates may await you, contact your local mortgage professional! They can help you find the best option for where you are at in your life now and help you to ensure future financial success.

 

Published by DLC Marketing Team

5 Tips for Staging Your Home

Mortgage Tips Kim Stenberg 9 Nov

Getting a home ready for sale or lease is a big job on its own. For some, the thought of staging your home may be overwhelming. Realtors may offer this service as part of their package, but if not, don’t worry, it’s easy to do it yourself with a little inspiration. Beyond the basic advice of the 3 D’s: depersonalize, declutter and decorate, there’s a lot more that can be done to get your desired outcome. Selling your home depends on many factors. Most importantly, it relies on the feeling it exudes when a potential buyer walks through the door. If you’re ready to move on quickly and for top dollar, consider some of these DIY home staging tips.

Your staging efforts will determine the experience buyers get when touring your house. The goal is to make them feel welcomed and at ease, starting with the exterior of the house. The right place gives prospective purchasers a positive feeling, somewhere they could see many joyous days.

1. use your resources

Can you think of an interior designer or realtor within your network? Invite them over to view the home in person and pick their brain a bit. They may be able to direct you to local businesses that offer furniture rentals or moving companies. Feng shui consultants are a good option to consider as well.

Emerging from ancient China, Feng shui is a traditional method also known as Chinese geomancy which is very popular in home staging. It claims to harmonize individuals by using the energy forces of their surrounding environment. By incorporating different elements in individual directions within your home, you may be inviting prosperity inside.

2. revive your rooms

Take a true and critical look at your place, does the kitchen scream “drab”? Are there stains on the upholstery? Does the bathroom look worn out? Freshening things up can make a place look new.

If your kitchen cabinets seem to darken up the room, consider painting them. Decide if you’d want them all one colour or different for the top and lower cabinets. Getting creative with the colour combination is one way of interesting buyers, however something too bold could turn some away. A clean slate is a great start, sparkle it up a bit with new hardware for the finishing touch. Doing this yourself can save lots of money as opposed to replacing the cabinets.

Do your existing rugs and window treatments pass the cleanliness check? If they are soiled or tattered it’s best to get them cleaned, repaired or replaced altogether. Go take a look around the sinks and tiles. Reapplying grout on tiles and caulk along sinks and windows makes it look so fresh and so clean.

3. edit your layout

Perhaps there is too much furniture that’s accumulated in the house throughout the years, making the space seem small and crowded. Consider donating, selling or storing larger items you want to keep for another day. Work with virtual room planners to help you better visualize the best possible placement for current furniture or future purchases.
Let the homes’ unique characteristics do the talking. Is there leaded glass in the living room or vaulted ceilings in the entryway? Keep the curtains pulled back to showcase your gorgeous windows and use decor that accentuates the height in the room. A fresh coat of paint in a warm yet neutral colour can work like magic.

4. boost your appeal

Ensure the entryway of the home is clean and has a nice doormat, if it’s on the larger side, a pair of outdoor chairs and side table would come in handy here. Sometimes using the senses works too, make sure the property smells nice but not overly fragrant. Before someone agrees to purchase your house they must first envision themselves living there. While staging, try to showcase all of the possible amenities that the house can provide. Maybe it’s a nursery set up in a small bedroom or a multipurpose bedroom with work from home desk combination. Give viewers of the home options of what they could use the square footage for. Does your house have an awkward empty space? Create a designated “drop zone” for day to day things like keys, mail and device charging.

5. accentuate your aesthetic

Do you want your home to make a statement? While the safe and neutral choices for paint schemes are welcomed, so are splashes of colour in accessories. Bold hues in accent furniture or throw blankets gives the potential buyer ideas of how they’d possibly decorate. Think of a theme, nautical for example, and roll with it for select items throughout the home. This is the time to get creative with artwork as well. Rooms with pops of blue, lanterns scattered or an overall coastal vibe will stand apart from boring beige places.

On the other hand, unless you’re looking to only sell to a specific demographic, it’s best to avoid overly themed staging. Test your styling limits by mixing metallics and materials. An office space with leather chairs can be styled with a sheepskin rug and nice shiny lamp. The idea is to mix and match textures, colours, patterns and light until it feels just right.

staged to sell

Home staging is an exercise in clearing away personal clutter, making your house feel like a home for someone else, all while trying to get the best possible return on investment. Reevaluating what is important with every possession you have can result in a renewed sense of self. Letting go of things that no longer serve you and likely won’t serve others can be freeing and purposeful at the same time.

Good luck on your journey!

 

Source: FCT

Canadian Employment Gains Slowed in October as Jobless Rate Fell

Latest News Kim Stenberg 5 Nov

Statistics Canada released the October Labour Force Survey this morning, reporting a slowdown in employment growth from the blockbuster pace of recent months. While some commentators were disappointed in the results, I have a more positive take. Canada returned its pre-pandemic level of employment in September ahead of the US and other G-7 countries. The resumption of a more normal pace of job gains was inevitable as we get closer to full employment.

Employment rose by 31,200 (+0.2%) in October, following a jump of 157,000 the month before. Indeed, job growth surged at an average monthly rate of 143,000 from June through September. That is not a sustainable pace of job gains but rather a reflection of the spike in hiring in the immediate aftermath of the lockdown. For example, hiring averaged 23,000 per month in the two years before the outbreak of COVID.

Employment increases in several industries, including retail trade, were offset by declines elsewhere, including accommodation and food services. Employment rose in Ontario and New Brunswick, while it fell in Manitoba and Saskatchewan. Declines in self-employment offset Gains among paid employees.

The number of employed people working less than half their usual hours fell 9.7% (-100,000) in October and remained 117,000 higher (+14.5%) than in February 2020. Total hours worked were up 1.0% in October and were 0.6% below their pre-pandemic level.

Among people of core working age (25 to 54 years), employment rose by 53,000 (+0.4%) in October, with all the gains in full-time work.

Unemployment rate declines for the fifth consecutive month

The unemployment rate fell 0.2 percentage points to 6.7% in October, a 20-month low and within 1.0 percentage points of the rate (5.7%) in February 2020 (see chart below).

Long-term unemployment—the number of people continuously unemployed for 27 weeks or more—was little changed in October, at 378,000, but down from its most recent peak of 486,000 in April 2021. Among people who were in long-term unemployment in September, 15.2% had found employment in October, slightly higher than the average of 11.6% observed from 2017 to 2019.

The labour force participation rate—the share of the population working or searching for work—fell by 0.2 percentage points to 65.3% in October, as fewer youth aged 15 to 24 searching for work. The size of the October decrease is consistent with typical monthly variations observed prior to the COVID-19 pandemic. The overall participation rate in October was virtually the same as the pre-pandemic rate of 65.5% observed in February 2020.

This rebound in Canada’s labour force participation rate contrasts with trends observed in the United States, where participation has recovered less quickly. When Canadian data are adjusted to US concepts, Canada’s participation rate was 65.1% in September 2021, 0.3 percentage points below its February 2020 level. In the United States, the September labour force participation rate was 1.7 percentage points below its pre-pandemic level.

Bottom Line 

Today’s employment data confirm that the Canadian economy is moving closer to full employment and may well hit the zero-output-gap threshold in the middle quarters of 2022, as the Bank of Canada suggested at their most recent policy meeting. The bulk of the gains in hiring were in the hard-hit retail sector, which returned to pre-pandemic levels last month. All of the gains were in full-time employment and average wages for permanent workers were 2.1% y/y. Wages gains are still relatively modest, supporting the Bank of Canada’s view that inflation pressures will dissipate by the end of next year.

Employment is now a bit above levels in February 2020. This is a historically rapid rebound from the massive job losses in the immediate wake of the first pandemic lockdowns.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

The Art of Leveraging

Mortgage Tips Kim Stenberg 4 Nov

For some people, just owning one property and having a single mortgage is enough to handle. But there may be no better way to grow your net worth than real estate. You might not realize homeownership can be a gateway to owning multiple investment properties. You might be thinking: there’s no way I can turn the value of my modest home into a real estate empire. Ok, maybe not an empire, but you can take the equity of your home and, with the right investment, get a return far greater than a stock portfolio.

Most people are trained to stay out of debt and don’t want to consider using the equity in their home to buy an investment property. But they haven’t realized the art of leveraging.

If you’re using equity from your primary residence to buy an investment property, keep in mind that the interest you’re using is tax deductible. Consider you’re also buying an appreciating asset, and if you put a real estate portfolio to a stock portfolio side-by-side, they don’t compare. Who is a good candidate? You might be surprised to learn you don’t need to make six figures to get into the game.

Essentially, you just have to be someone who wants to be a little smarter with their down payment. Before you go down that road, there are some quick things you need to know.

With investment properties, the minimum down payment will jump to 20% or 25% from 5%. Rental income from the property can be used to debt service the mortgage application, while some lenders will have a minimum liquid net worth requirement outside of the property.

TO MAKE SURE YOU’RE GETTING THE BEST OUT OF YOUR INVESTMENT PROPERTY, YOU MAY WANT TO CONSIDER THE FOLLOWING:

ARE THERE EMPLOYMENT OPPORTUNITIES IN THE AREA?

Statistics Canada (www.statcan.gc.ca) offers reliable and timely data on the latest trends in the real estate market. Also, keeping up with the news will help you hear if a large corporation may be moving into the area, with families soon to follow. Consider if the property is in a college town or near a military facility where there will always be a need for rental properties.

WHERE IS THE PROPERTY LOCATED?

Walk Score is a big attraction to most renters. What is the proximity to schools, hospitals, local transportation, grocery stores, etc.? Look for properties that are in a central location so that the demand will be greater. What are the average rental rates in the area? Your monthly rent is your bread and butter. Find out what the average rental rates are in the area by visiting Statistics Canada or the Canadian Rental Housing Index.

IS THE AREA SAFE?

Once again, Statistics Canada is your go-to source for crime stats in the area. Or visit the local police department to get it right from the source. Remember, in this day and age, renters do their homework too. They will get the same info and make their decisions based on what they find out.

ARE THERE ANY AMENITIES NEARBY?

Find out what amenities are nearby like free public transportation, a community pool or center, a large shopping center, a dog park, etc. The demand for certain amenities will vary based on the area. Remember that families will want different amenities than young professionals.

ARE THERE ANY PLANS FOR FUTURE DEVELOPMENT IN THE AREA?

Sometimes a simple drive-by will show you a lot about the area. Are there quite a few empty homes, condos, or store fronts? Does it look like there is a large boom in new construction? Often a neighborhood in the beginning steps of gentrification could result in both a faster and higher appreciation for investment properties.

IS THERE A HIGH NUMBER OF PROPERTIES ON THE MARKET?

Keep an eye out for market trends in the last couple of years. Review vacancy rates for the area (your realtor will have access to this info). Make sure to determine if you could carry the mortgage for a period of time in case no one rents from you.

 

DLC Marketing Team

What is Title Insurance and Other Questions Answered!

Mortgage Tips Kim Stenberg 2 Nov

Title insurance can easily seem like another unnecessary add-on to the already complicated and costly process of buying a house, but nothing could be further from the truth. It can help speed up the process of closing on your new home, while protecting you and your heirs against a variety of unforeseen and expensive risks. It offers cost-effective, long-term, powerful protection, but there’s a great deal to know about it.

Your notary or lawyer is a fantastic resource to learn about this vital protection for you as a homeowner—we’ve compiled some of the most frequently asked questions they receive:

what is title insurance?

Title insurance is insurance that protects against losses from defects in your title—the legal ownership of your property. These defects can include issues with the property survey, the registration of your land title and problems you didn’t know you inherited from a previous owner, like back taxes or improper renovations. Title defects are unpredictable and expensive, but title insurance lets homeowners protect themselves.

Did you know: title insurance is also important in condos?

are title insurance and home insurance the same thing?

It’s common to confuse home insurance with title insurance, or to assume because you have home insurance, you’re fully protected. But they cover completely separate risks, and even their premiums work differently.

Home insurance deals with your home’s physical structure, and the items inside it. Title insurance deals with your legal ownership of the property, even if it’s an empty lot. Home insurance covers potential future physical damage to the home, or losses to replace stolen insured items. Title insurance covers (apart from future fraud) losses from issues that already existed, but that you didn’t know about.

Here’s a classic example of the difference:

  • Are you out money because your shed flooded or got broken into? You may be covered by home insurance.
  • Are you out money because the shed turned out to be on your neighbour’s land (a mistake by the surveyor) and you had to move it? That may be a title insurance claim.

Get a full breakdown of home insurance vs title insurance here.

what does title insurance cover?

Most title insurance policies covers losses from problems that already exist but that you don’t know about.

  • If the survey for your property wasn’t done correctly, you won’t know until you’re forced to move the shed you unwittingly built on your neighbour’s land.
  • If the previous owner of your home did renovations without a permit, you won’t know until the city forces you to bring your home up to code.
  • If the previous owner left taxes on the property unpaid, or there were taxes that weren’t addressed or correctly levied on the property when the deal closed, you won’t know until the government comes looking for those back taxes.

Title insurance may cover your losses in each of these scenarios, and many more. Another notable point of coverage is title fraud—a thief using your identity to borrow money against your home, or even sell it out from under you.

See the damage title fraud can do, and how to protect against it

what doesn’t title insurance cover?

It’s important to remember title insurance coverage often depends on whether or not an issue was known about when you bought the policy. While you can always get owner’s title insurance at any time, it’s best to get your policy as you’re buying the house. That way, any issues you learn about afterward can fall under its umbrella—coverage almost never applies to title defects you knew about before getting the policy. There are some instances where title insurance can still protect you from a known title defect, but it’s important to ask your lawyer or notary.

Title insurance covers the legal existence of your property, not the property itself. The losses it covers will often originate from something physical—moving a shed, bringing your home up to code—but the coverage comes from the title defect that led you to be responsible for the cost, not the issue that incurred the cost.

Here’s a quick example: A couple finds a leak in their roof and has to pay to have it repaired, as well as fixing the water damage the leak caused before it was discovered. Does title insurance apply?

  • It can, if the previous owner had done work involving that roof without a permit. The covered risk is from the previous owner’s lack of a permit, not the possibility the roof might leak.
  • If the previous work had a permit, or if the old owner never did work on the roof, title insurance unfortunately can’t cover the losses from repairing it.

The most common coverage confusion we see comes from this perceived grey area between home and title insurance. Just because the builder or previous owner did a shoddy job doesn’t always mean title insurance can cover the losses. When the government makes you bring a previous owner’s build up to code, always verify if the work was properly permitted—if it wasn’t, your next call should be to your title insurer to make a claim.

If your neighbor makes a claim against you, for instance alleging your new garage extension encroaches on their property, the issue title insurance checks for is the property survey, not the garage itself.

See more examples of confusion over coverage here.

is title insurance part of western protocol?

Western Conveyancing Protocol (also called WCP or the Protocol) is a system the law societies in the Western provinces created to help close real estate deals faster. A Protocol closing lets the deal “close” on the closing date, even though the land title registration hasn’t happened yet. The seller can get their money and the buyer can move in without waiting weeks for the title registry.

Title insurance is separate from WCP. It offers all of the same benefits—fast closing, registration gap coverage—with much more protection for the buyer. More notaries and lawyers are relying on title insurance to cover the gaps in WCP coverage and make sure you’re properly protected, especially in hotter markets like Vancouver or Calgary.

Learn more about how title insurance is helping buyers in the new Calgary market.

what is duty to defend?

In title insurance, duty to defend is the requirement that the insurer cover not just their insured’s losses, but any legal fees associated with the case. In Canada, the standard is that duty to defend applies if there is a possibility of a claim succeeding.

This clause shows up in all FCT title insurance policies and means the policy also covers legal fees involved in defending your title. There is no dollar limit to this coverage, and it does not reduce the insurance coverage going forward.

B.C.’s duty to defend standards are notably higher than Ontario’s, allowing outside evidence to play a part in determining whether the duty applies. In Alberta, a blanket duty to defend applies until the cause of an incident—and through that, the type of coverage invoked—is determined.

Title fraud is a great example of where the duty to defend clause shines in protecting policy holders. Beyond the damage to your credit score and ability to leverage equity in your home, title fraud is notoriously expensive to resolve legally. It’s not uncommon for legal fees in the tens of thousands to restore ownership of a title—sometimes more, in cases where the victim’s home has been sold and the (innocent) buyer is intent on protecting their purchase.

Duty to defend kicks in when you incur legal fees as part of resolving an issue where the risk is covered under the policy. In short: if the policy covers you in a particular situation, it also covers the legal fees involved with resolving it.

Learn more about the duty to defend included in every FCT title insurance policy here.

is title insurance mandatory?

Yes and no. There are two types of title insurance policies: one that protects the lender and one that protects the property owner—you. The law doesn’t make either mandatory, but most lenders will require you to buy the lender policy as part of securing your mortgage from them. The owner policy is optional, so it’s important to make sure your notary or lawyer includes an owner’s policy as well when you close on your home.

One more huge point in favour of an owner policy is that it lasts as long as your title does. If you refinance your mortgage with a different lender, they’ll get you to buy a new lender policy, but you’ll never need to buy a new owner policy on the same property—you’re still covered. Always make sure when you’re discussing with your notary or lawyer that you’re talking about an owner’s title insurance policy, and never be afraid to ask questions about it coverage.

Here’s how to check if you have a homeowner title insurance policy.

Insurance by FCT Insurance Company Ltd. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Some products/services may vary by province. Prices and products/services offered are subject to change without notice