Low Rate Mortgage Can be Highly Restrictive

One basis point on a mortgage amounts to 1/100th of 1%

In an interesting article by the Editor of CanadianMortgageTrends.com, Mr. Robert McLister wrote that one 1 basis point (bps) equals one one-hundredth of one percent or .01%. So on a $300,000 mortgage 1 bps represents “a scant $1.49 a month” in the mortgage payment. What’s even more insightful is Mr. McLister’s following statement, “From the way some folks select a mortgage, however, it might as well be $149 a month.” The article was published May 18, 2015.

Lowest rates have spawned restrictive or “no frills” mortgages

Still today, mortgage hunters tend to shop for a mortgage strictly on the lowest rate offered regardless of terms. This generates offers with as little as 1-2 bps compared to the next lowest competitor. As a side effect, these low rates come with a variety of restrictions generally ignored at time of purchase. 

 “No Frills” mortgages reduce prepayments and more

These restrictions can have any number of limitations: reduce the prepayment privilege, make a payout before maturity highly expensive or more difficult than normal to discharge, increase the penalty if increasing the size of the loan whether moving or renovating.

Specific examples of limitations 

Gidia Molinaro, mortgage agent for Centum Omni Mortgage Corp. notes some of the following difficulties with “No Frills” mortgages:

  • A rate sale with a low term often limits the prepayment option to only 5% per year compared to the typical 15-20%. If you plan on prepaying from an employment bonus or income tax rebate, this restricts the amount you can prepay to reduce your mortgage.
     
  • You might have prepayment privileges but can only payout the mortgage in full upon sale of the property.
     
  • If you have a mortgage which doesn't allow payouts unless the home is sold, you might not be able to refinance for more money with the same lender.
     
  • If you want to refinance during the term, it has to be with the same lender. Your current rate on the existing mortgage and the increase will result in a blended rate. Typically the result is a higher rate.
     
  • If you choose a promotional mortgage, your are teased with an extremely low rate for the first year or two; after the rate jumps up to say the posted rate. This usually ends up costing more than a fixed five year mortgage.

The Importance of Being Barefoot! (By Christa Barrete)

DID YOU KNOW?

Recent scientific studies reveal that taking off your shoes and walking barefoot on the natural earth has surprising benefits for your health! Walking barefoot creates a sensual sense of delight, and having your bare soles kneaded by the rugged ground can be as pleasurable as getting a professional (and expensive!) foot massage. There are reflexology points in your feet which connect to every organ in the body, and walking barefoot on uneven natural terrain stimulates pressure points in the feet.

 

But more than that, it is impossible to have a natural gait while wearing shoes. While shoes can protect our feet as we walk in the city and over sharp objects, they are no substitute for the precise shape of the soles of our feet. The unnatural shape of our shoes will throws our body out of its natural alignment over time, and while this causes no major concerns for some, for others it can cause problems such as hip and back pain that has no conventionally diagnoseable origin.

Walking barefoot allows for a natural gait, giving your body the chance to align itself and move freely. Walking barefoot for a period of time each day frees up tension stored in the muscles from shoe-wearing and allows the body to move naturally and freely, which improves posture and reduces stress build up.

Walking barefoot also literally grounds of the human body. Human beings are electrical in nature and electrons in the body have a charge. When our bodies have a predominantly positive charge, we feel stressed and can experience dis-ease. Positively charged ions or ‘free radicals’ are responsible for health problems ranging from aging to inflammation. Free radicals occur in the body as a result of exposure to un-natural environments, electronic equipment like computers, and the consumption of unhealthy foods.

Walking barefoot allows free radicals to move through our feet and be discharged into the earth. As the unhealthy positive ions are leaving the body, the beneficial negative ions from the earth travel up through our feet into our bodies. This cannot occur when wearing shoes, because they have rubber soles that effectively insulate us against this electric energy. When we have more negative ions in the body, we feel relaxed and happy, and negative ions in the body have been associated with a reduction in inflammation and dis-ease.

For more information on the benefits of walking barefoot and other great health tips, visit Christa’s Facebook page: https://www.facebook.com/goodvibesyoganiagarafalls/.

PROTECT YOUR DEVICES AND YOUR IDENTITY!

This blog entry will be different from previous ones because I want to share a very personal experience with you in the hopes of helping you avoid the same headache that I have been dealing with for the past week. On Friday February 3rd I attended a 3-day conference in Toronto. Since I arrived early, my luggage was stored until I was able to check into my room. At some point between unloading the luggage and moving it to storage, the briefcase with my laptop disappeared.

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Apparently it is actually very easy to walk off with someone else's luggage when hundreds of business people with similar suitcases are all arriving around the same time. On Monday in the afternoon I received a call from hotel security notifying me that my briefcase has been located. Some items were taken and the briefcase and laptop were dirty and banged up, and of course my private laptop was likely in the hands of strangers for 3 full days. As a result of this incident, I have learned a lot about identity theft, common scams, and more, and I really want to share what I learned so that this doesn’t happen to you (and so that you will know exactly what to do in case that it does!).

1.      Whether you are going on a day trip or on a long vacation, take only what is absolutely necessary! The more items you bring, the more items you could potentially lose.

2.     Put your name and contact number on your computer, either by engraving it or marking it in some other way so that whoever finds it will be able to contact you without needing to open the computer to find your information.

3.     Make sure that you computer is password-protected so that strangers cannot easily gain access to it.

4.     Don’t keep all of your important files on just one device/computer. Be sure to back up your important documents so that you can access them even in the event that your computer is lost.

5.   Be sure to back up your files on a regular basis and do not save your passwords on your computer. It is harder to remember and keep inputting them each time, but in case your laptop is lost you will be grateful that strangers will not have access to all of your passwords.

Remember that if your computer is lost or your house is broken into, you are at risk for identity theft. To protect yourself from such threats, you can take the following steps:

1.   Contact the post office and ask them to notify you in the event that someone tries to change your mail forwarding address.

2.  Contact both consumer credit bureaus (Equifax and Transunion) and ask them to post a fraud alert on your credit cards. This means that you will be contacted anytime your score/report is accessed to obtain credit. These alerts will stay on your file for 6 years. There is a charge of $5.50 for Equifax and $5.65 for Transunion, and they will take credit card payment when the alerts are activated. If you would like to have the alerts put on, you will need to contact each one individually – it is automated, and they verify personal information on the call prior to the alert. Contact numbers: Equifax - 1-800-465-7166, Transunion 1-877-525-3823

3.   Go to your bank and change your bank cards and/or bank numbers.

4.   Contact your credit card company and talk to the fraud department about getting a new credit card and new credit card number issued to you.

5.   Contact everyone on your contact list and all of your Facebook friends and inform them about the potential identity theft attempt and ask them to contact you right away if they notice anything out of the ordinary in your circles.

This experience has been very stressful but also very educational for me, and my biggest takeaway from all of this was that this type of thing happens all the time! I hope that the tips I offered can help you avoid the trouble I had to go through, and that it will help you protect yourself and your loved ones from identity thieves and scammers.

Two Ways an "As Is" Clause is Used in House Sale Contract

  1. If you are selling a property that needs a fair amount of work, your salesperson may suggest or insert an “as is’ clause in any offer you receive, either as a schedule sent to the buyer’s agent with direction to include it with the offer or write it in a counter offer to the buyer. As well, the listing remarks will likely state, “property sold “as is’”.
     
  2. Such a clause is typically used in the sale of properties in which the seller may be a mortgagee selling under power of sale, an estate trustee selling an estate, or a power of attorney for property selling on behalf of the registered owner. Each of these signing authorities do not live in the property being sold and can’t, therefore, vouch for its condition.

A typical “as is” clause basically says:

  • The buyer accepts the property on an “as is” basis with no seller representation or warranty as to the fitness, state of repair, defects in workmanship or condition of the property;
     
  • The seller has no responsibility to remedy any defects or complete any unfinished work;
     
  • The buyer has relied entirely on his own inspections and investigations as to any defects, as well as quality and value of the property.

Buyer Obligations

In reference to the last point above, the buyer is entitled to perform his due diligence. So aside from a condition to obtain a mortgage, he can include any conditions that concern him, such as home inspection, zoning, legal usage and cost to remedy stated defects to name a few. Hence an “as is” clause does not hamper the buyer from making sure he knows what he is buying.

Seller Obligations

There does seem to be evidence that some salespeople misunderstand the “as is” clause with respect to sellers. You’ll sometimes hear a salesperson say something like this,
“With the ‘as is’ clause the seller has no obligation to disclose anything.”

This is a mistaken interpretation. The Seller has an obligation to disclose a hidden or latent defect in spite of the “as is” clause. Further, if the seller corrected a defect there is no guaranteeing that the problem might not reappear, so this too should be disclosed.

Why Niagara Falls is known as the Honeymoon Capital of the World

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There is no better time to stop and appreciate that we live in Niagara than the month of February, when Valentine’s Day is just around the corner and many couples flock to Niagara Falls, the Honeymoon Capital of the World! But did you ever wonder how Niagara Falls earned such a prestigious and internationally-recognized title?

The first recorded honeymoon trip to Niagara Falls dates back to 1802 when Theodosia Burr (daughter of then US Vice-President Aaron Burr) visited the falls with husband Joseph Alston. It is also said that Napoleon Bonaparte’s younger brother Jerome visited Niagara with his bride in the early 1800s. These high-profile visits were the start of a trend, and with the addition of railway lines and the opening of the Erie Canal (which made Niagara much more accessible to visitors), more and more couples began visiting Niagara Falls for their honeymoon. Already in the early 1900s the phrase “Honeymoon Capital of the World” was being used in advertisements and brochures designed to encourage more people to visit Niagara, and the phrase is still used today.

More than 200 years after the first honeymooners came to Niagara Falls, the city continues to be featured on prestigious top 10 lists for the best places in the world to visit for your honeymoon, and many couples are now choosing to tie the knot in Niagara as well. With spectacular attractions like the Maid of the Mist, helicopter rides over the falls, the Sky Wheel observation Ferris Wheel, world-class shows, and ample opportunities for memorable romantic walks and dinners, it is no wonder that Niagara Falls remains a top destination for newlyweds from across the globe.

For those of us lucky enough to live here, it is easy to forget that every year people from all around the globe choose to dedicate a great deal of their time and money just to come to Niagara. What a place to call home!

 

 

5 Changes to Ontario’s Land Transfer Tax

1.  Currently the maximum land transfer refund for first time buyers is $2,000. This means no transfer tax is payable on the first $227,500 of the purchase price of a home or value of consideration.

On January 1, 2017, the refund will increase to a maximum of $4,000.

According to the Ontario Government’s, a first time home buyer would pay no Land Transfer Tax on the first $368,000 of the value of consideration. Above $368,000, a qualifying first time buyer would receive the $4,000 maximum refund and would pay for tax beyond that amount.

2.  Currently, the top tax rate is 2% above $400,000 for one or two single family residences.

As of January 1, 2017, the tax rate increases to 2.5% but only on one or two single family homes above $2,000,000.

So this increase would not affect homes less than $2,000,000. 99% of single family homes purchased in 2015 were below that says Ontario.

The tax rate scale will be as follows:

  • 5% up to and including $55,000;
  • 1% above $55,000 and up to and including $250,000;
  • 1.5% above $250,000;
  • 2% above $400,000;
  • 2.5% above $2,000,000 for one or two single family residences.

Commercial, industrial, multi-residential and agricultural properties will go to 2% above $400,000 with no increase beyond.

3.  Currently all first time buyers are eligible for the refund, regardless of citizenship or residency status.

As of January 1, 2017, the refund will be restricted to Canadian Citizens and permanent residents.

Once a transaction closes, a buyer will have eighteen months to obtain citizenship or permanent resident status and apply for the refund.

4.  Currently the Land Transfer Affidavit includes the allocation of total consideration that includes cash paid, mortgage(s), value of chattels and among other things, the total value of consideration.

As of January 1, 2017 the Province will authorize the collection of additional prescribed information to include the following:

Intended use of the property, residency, citizenship and permanent resident status of the buyers, and type of property (such as residential, commercial, agricultural, industrial or recreational;

5.  Currently land transfer tax is based on the value of consideration; that is typically the purchase price of the property.

The Province will explore calculating LTT from value of consideration to fair market value of the property.

Most other provinces use fair market value for calculating LTT. The government posits that substituting fair market value “reduces opportunities for tax avoidance and promotes fairness.”

Should I Move or Renovate in Spring 2017

Even in the midst of winter many homeowners are already looking ahead to springtime and planning renovations in the hopes of increasing the value of their homes. However, many popular home renovation projects are not worth the money, and if done poorly they can even lower the value of your home. In some cases it is more profitable to sell your current home and buy a new one, and here are some points to consider when making this decision.

  1. The Neighbourhood – Do you like where you live? Does it have all the amenities you need? Does it have potential problems that could motivate you to move? Remember that you can fix a house but you can’t fix a neighbourhood.
     
  2. The Condition of Your Home – Not all homes are a good candidate for renovation. An older home with foundation issues or other major defects can be a nightmare to renovate, so before you commit to any major projects you need to conduct a thorough assessment of your home’s foundation.
     
  3. Money Talks – Does renovating your home make financial sense? Not only can renovations be very expensive, but there are also additional costs that we don’t often think about, such as temporary living expenses in case you need to leave your home for the duration of the renovations. Before deciding to move or stay, make sure that you take all potential costs into account.
     
  4. Zoning Regulations – The regulations regarding zoning change all the time and you need to be up-to-date on all of them before embarking on a major renovation project. If your home is an older one, new zoning regulations could be difficult to navigate as you try to bring all of your modifications and additions up to code.
     
  5. Home Value – If you want to increase the value of your home in the hopes of selling it in the future, keep in mind that not every renovation adds significant value. While mature trees and fencing will likely add value to your home, a new kitchen is only considered “new” for about 6 months and renovating your deck or building a pool could cost you more than you can hope to get back. For example, in 2014 a midrange composite deck addition required an average of $15,000, but it only added about $11,000 to the resale value of a home.

Think about these points carefully before opting for a big renovation project in the spring. If you are looking for major additions such as a new pool and you are not overly attached to your current neighbourhood, selling your home and moving to a new one is often the more stress-free and profitable option.

For more information, email me today at Barbara.Grumme@Century21.ca to schedule a no-charge, no obligation consultation.

How To Keep Your New Year's Resolutions in 5 Easy Steps

With the New Year come new beginnings, and many of us are determined to turn over a new leaf and finally do that one thing that we’ve been putting off for a while. Whether we want to exercise more often, spend more time with the family, or finally go for that big promotion, the New Year is a time when most of us make life changing resolutions. But how can we actually keep these resolutions by the time February roles around?

Here are 5 easy steps to help you stick to your New Year’s resolutions in 2017!

  1. Be Specific! Many people make vague resolutions such as “get in shape” or “work harder” in the New Year, but when your goals are not specific you will not be motivated to work towards them. Instead, commit to losing 10 pounds or exercising at least 3 times a week, and then follow through! You can always move the bar higher as you go, but seeing real and specific results will motivate you to stick to it.
     
  2. Plan Ahead! Once you pick a specific goal, you need to plan your daily routine around that goal. If your New Year’s resolution is to exercise at least 3 times a week, you have to organize your life in a way that gives you the time to do that. Keeping a written schedule which you can review daily will help to keep you on track.
     
  3. Be Patient! If your goal is to lose 10 pounds in a month but after a month goes by you still find yourself at the same weight, your first instinct will likely be frustration and you might be tempted to give up altogether. At this point you must remember that everyone is different, and big changes in your daily routine need time to take hold. Stick to your guns and persevere.
     
  4. Be Flexible! As you pursue your New Year’s resolutions you might encounter unforeseen obstacles. For instance, you might be called into work on a day that you were planning to devote to exercise or some other important activity. Don’t let this throw you off! Success is not an all-or-nothing game, and you can reschedule your activities or even skip a day or two as long as you stay committed for the long haul.
     
  5. Get Support! Make the commitment to tell your friends and family what your goals are and what you are doing to achieve them. If you do this you will feel a greater incentive to follow through, and your loved ones will be able to support you through the process and remind you of your priorities. The “Buddy System” is an old idea, but that’s because it works.
     

If you follow these 5 easy steps you will be far more likely to stick to your New Year’s resolutions, and 2017 can be your year for new beginnings and new adventures!

Year End Tax Tips - Rental Property Write-offs

If you own a rental property or if you are renting out one or more rooms in your home, a large number of your expenses can be deducted in calculating your net rental income. These expenses include utility costs, maintenance costs, property taxes, mortgage interest (but not principal), property management fees, and advertising fees.

You can use rental losses to reduce income from other sources. In cases where rental losses exceed income from other sources and cannot be deducted on the current year’s tax return, it becomes a non-capital loss that can be carried over to reduce taxable income in other years.

If you are only renting out a portion of your home then you are eligible to deduct only a portion of the costs, and if you are renting to a friend or relative at less than fair market value and this results in a loss, you will not be able to deduct it. Costs that are directly related to the rental portion of your home will be 100% deductible, while those costs that relate to the whole building (e.g. insurance and property taxes) are only partially deductible. Expenses can be split based on the number of rooms you are renting or based on the floor area, as long as the split is reasonable.

From TaxTips.ca:

Capital cost allowance (CCA) may be claimed based on the purchase price of the building, furniture and fixtures, etc., but not the land, and may not be used to create or increase a rental loss.  If you only rent a portion of your home, then you would only be able to claim a portion of the CCA, and this may result in the loss of the principal residence exemption when you eventually sell your home.  The claiming of capital cost allowance will probably result in a recapture of the CCA when the property is sold.  This will happen if the selling price of the building is greater than the remaining undepreciated capital cost (UCC) at the time of sale.  The difference between the original cost and the UCC will be added back to income.  If the selling price is greater than the original cost of the building, then the difference between the selling price and the original cost will be a capital gain.  When purchasing or selling a rental property, it is important to break down the purchase or sale price between buildings and land.  

A change in use of your home from personal residence to rental property, or from rental property to personal residence, can result in a deemed disposition for tax purposes.  This means that you will be considered to have sold your home and repurchased it immediately thereafter for fair market value.  There are many factors which affect this, and professional advice is recommended.

Net rental income or loss is reported on line 126 of your personal tax return.  This net income is included in "earned income" for purposes of calculating your allowable RRSP deduction limit for the following year.  The net income is calculated by completing form T776 Statement of Real Estate Rentals.  This form is used whether the property is in Canada or in another country.

For more information, please click here.

Essential Ingredients for a Stress-free Holiday Season - Frankincense Oil

Christmas is right around the corner, so what better time to talk about the many health benefits of frankincense? Frankincense was one of the gifts offered to baby Jesus by the three wise men, and it holds great religious meaning for Christians around the world. Aside from its religious significance, frankincense has also been transformed into an essential oil that is widely used in aromatherapy and natural health.  Here are some interesting and important facts that you might not know about frankincense oil.

Used as an anointing oil in religious ceremonies for thousands of years, over the centuries frankincense has also been a popular ingredient in cosmetics and it has been used by everyone from ancient Egyptians to Anglo-Saxons. Frankincense oil has several important benefits for our health, including calming and comforting properties that allow us to deal with stressful and emotional situations. In aromatherapy frankincense oil is used as a sedative that helps create a feeling of satisfaction, relaxation, and mental peace, allowing us to deal more effectively with stress, anger, and anxiety.

Frankincense oil is also useful for your skin health, and it has been shown to treat dry skin, reduce the appearance of scars and stretch marks, help with healthy cell regeneration, and reverse the signs of aging. The properties of frankincense oils can help speed up the healing of bites, cuts, boils, and acne, as well as strengthen gums and hair roots.

The health benefits of frankincense oils are associated with its anti-inflammatory, antiseptic, digestive, and disinfectant properties. Frankincense oil is considered a tonic because it is beneficial to all of the systems operating within our bodies, including the nervous, respiratory, digestive, and excretory systems. Moreover, it helps our bodies absorb nutrients and strengthens our immune system.

While generally safe, it is advisable to do a spot test on your skin to check if you have any type of sensitivity to frankincense oil. In order to take the oil internally it is advisable to dilute a drop in a teaspoon of honey, an edible carrier oil (such as coconut oil), or a glass of purified water or any non-acidic, non-dairy beverage. You could also simply put one or two drops under your tongue, but be advised that ingesting the oil is not recommended for children below the age of 7, and older children and teens may require higher dilutions.

For more information or to purchase frankincense and other essential oils, please click here.

 

PROTECT THE HEALTH OF YOUR TREES!

Deciduous trees are an important part of many landscapes; they serve as windbreakers and markers for property lines, and they also provide privacy, shade, and aesthetic value for your home. However, sometimes trees are planted in less than ideal locations or the conditions around existing trees are modified in a way that may put them at risk.

Trees that are under stress become more vulnerable to invasion by insects and pests. These invasions are often a symptom of underlying problems, such as poor soil aeration from overwatering. Identifying the problem early on and taking corrective action is crucial for improving the vigour of trees and preserving their integrity in the long run.

The first step to identifying disorders of broad-leaved trees is to determine whether the stress is biotic or living, or whether it is abiotic or non-living. Biotic stresses are the result of insects, mites, and disease such as bacteria or fungi, while abiotic stresses are the result of non-living factors such as the deficiency of water and nutrients, severe weather conditions, or the presence of chemicals such as salts or pesticides.

When looking for damage caused by insects, examine the affected tree carefully for signs of infestation. Many wood-boring insects create holes in the bark and sawdust during their tunnelling, while others such as the Gypsy moth leave behind empty cocoons. Other substances that can be left by insects include egg cases, honeydew, webbing, or feces.

Abiotic stresses can be more difficult to spot than biotic ones, but some strategies include checking the surrounding plants for similar issues, assessing the soil, checking the local weather conditions, and looking into any recent activity that might have occurred around the tree (such as construction or pesticide application).

It is important to remember that every year many trees are killed or damaged by human activity. Improper watering, improper maintenance, site alteration, construction stresses, and salt and pesticide damage are all significant threats to the health of trees in Ontario. Much of this harm can be avoided if we resolve to take greater care about the impact that our activities have on the environment, and for more information about identifying and removing threats to the trees around you please visit https://www.ontario.ca/page/environment-and-energy.

Conserve Your Energy and Save Money this Fall/Winter Season

Photo by ipopba/iStock / Getty Images

Photo by ipopba/iStock / Getty Images

There are a lot of great reasons to reduce your energy consumption, such as protecting the environment and paying less for electricity. If you’re not sure where to start and would like some useful tips, this post will help you be more efficient with your consumption during this Fall/Winter season.

FALL - The days are getting shorter and the weather is getting colder, and for someone interested in conserving energy this is the time to prepare for the winter.

  • Buy insulated plates for outlets and caulk and weather-strip windows, doors, and dryer vents (drafts around electric outlets, doors, windows and vents can account for up to 25% of your total heating costs)
  • Check your insulation – the attic represents between 10% and 15% of a home’s overall heat loss on average, so attics are the best places to start
  • Ensure that your furnace is working at peak efficiency for the winter by arranging a yearly maintenance check
  • Installing a programmable thermostat can save you between 16-25% in energy.
  • The water heater is responsible for about 20% of the average energy bill, so you might want to think about a higher-insulated tank and about insulating your hot pipes with high-quality insulation.

WINTER – As the weather gets colder your energy consumption is sure to increase, but during this time the preparations you made during the fall will begin to pay off. On top of all that, there are still a number of things you can do during the winter months to conserve your energy.

  • Check for drafts around electrical outlets, windows, and doors
  • Open your curtains and blinds on bright and sunny days to warm the inside of the house, and then close them once the sun goes down in order to reduce heat loss
  • Set your programmable thermostat to drop at least 3°C at night (while you are asleep beneath your warm blankets you can afford to spend less energy on heating the rest of the house)
  • Properly humidified air feels warmer and allows you to turn your thermostat down, so use a humidifier
  •  Replace your most frequently used incandescent lightbulbs with compact fluorescent ones as they use only a third of the electricity of the standard lightbulbs.
  • An unfinished basement loses a lot of heat so adding interior insulation will go a long way to improving the overall energy efficiency of your home.

If you follow these steps during this Fall/Winter season you are sure to save energy, and in the long run this will not only benefit the environment but also your pocketbook.