|
Call Now! 1-866-932-8412 or
Email: info@mortgagegirl.ca |
Intergenerational Mortgages are based upon the idea that a homeowner can pass on the mortgage debt and interest repayments, along with the house, to their children when they die.
No such mortgages exist in Canada, due mostly because such mortgages are interest-only, and that’s practice currently banned for Canadian banks.
Intergenerational Mortgages, however, have made news in Vancouver last week, thanks to Patricia Croft, the retiring chief economist with RBC Global Asset Management, who spoke about the inflated Vancouver housing market to an audience of about 1,000 real estate executives this past week.
The gist of her comments was that prices and affordability had eroded so much in Vancouver that consumers might turn to intergenerational mortgages.
Reached by telephone the next day, she chuckled, agreeing she was being a little mischievous by throwing out the idea of a mortgage you pass on to the next generation.
“But how do people even afford to buy their homes?” asks Ms. Croft, noting that Royal Bank of Canada’s latest affordability index shows it takes 66% of pre-tax household income to carry a Vancouver bungalow. That’s 60% above the national average.
“They actually had intergenerational mortgages in Japan. When you passed on, you passed on the mortgage. If any city would qualify to market it, it would be Vancouver,” she says.
In other parts of the world, there has been little choice but to turn to longer amortization because it’s impossible for the average consumer to pay their home off in their lifetime.
Tony Loughran, head of customer services of England-based Kent Reliance Building Society, which is similar to a credit union, says his company has been providing intergenerational mortgages in the United Kingdom for about four years.
“The mortgage goes on in perpetuity,” says Mr. Loughran, who adds that customers simply pay the interest during their lifetime. “There is a niche for them. If property comes too expensive, it’s a way to buy it and then pass it on to the younger generation who might find prices beyond their reach.”
Read more:
http://www.financialpost.com
Characteristics of highly effective real estate investors
By Jean Folger
Investopedia.com
Whether an investor has a degree or not, there are certain characteristics that top real estate investors commonly possess:
Treat Investments as Businesses
It is important for real estate investors to approach their real estate activities as a business in order to establish and achieve short- and long-term goals. A business plan allows real estate investors to not only identify objectives, but also determine a viable course of action towards their attainment. A business plan also allows investors to visualize the big picture, which helps maintain focus on the goals rather than on any minor setback. Real estate investing can be complicated and demanding, and a solid plan can keep investors organized and on task.
Know Their Markets
Effective real estate investors acquire an in-depth knowledge of their selected market(s). The more an investor understands a particular market, the more qualified he or she will be to make sound business decisions. Keeping abreast of current trends, including any changes in consumer spending habits, mortgage rates and the unemployment rate, to name a few, enables savvy real estate investors to acknowledge current conditions, and plan for the future. Being familiar with specific markets allows investors to predict when trends are going to change, creating potentially beneficial opportunities for the prepared investor.
Maintain High Ethical Standards
Realtors are bound to act according to a code of ethics and standards of practice policy, and real estate agents are held to each state’s real estate commission rules and standards. Real estate investors, however, unless they are associated with membership-based organizations, are not usually required to maintain a particular degree of ethics in their business practices, as long as they operate within the boundaries of the law. Even though it would be easy to take advantage of this situation, most successful real estate investors, and especially those who remain in the business for the long haul, maintain high ethical standards. Since real estate investing involves actively working with people, an investor’s reputation is likely to be far reaching. In the case of an investor lacking in ethics, the consequences can be damaging. Effective real estate investors know it is better to conduct fair business, rather than seeing what they can get away with.
Develop a Focus or Niche
Because there are so many ways to invest in real estate, it is important for investors to develop a focus in order to gain the depth of knowledge essential to becoming successful. This involves learning everything about a certain type of investment – whether it is wholesaling or commercial real estate – and becoming confident in that arena. Taking the time to develop this level of understanding is integral to the long-term success of the investor. Once a particular market is mastered, the investor can move on to additional areas using the same in-depth approach. Savvy investors know that it is better to do one thing well than five things poorly.
Strive to be Good Customer Service Representatives
Referrals generate a sizable portion of a real estate investor’s business, so it is critical that investors treat others with respect. This includes business partners, associates, clients, renters and anyone with whom the investor has a business relationship. Effective real estate investors are good customer service representatives by paying attention to detail, listening and responding to complaints and concerns, and representing their business in a positive and professional manner.
Stay Educated
As with any business, it is imperative to stay up to date with the laws, regulations, terminology and trends that form the basis of the real estate investor’s business. Keeping current does require additional work, but it can be viewed as an investment in the future of the business. Investors who fall behind risk not only losing momentum in their businesses, but also legal ramifications if laws are ignored or broken. When it pertains to the law, ignorance is no excuse. Successful real estate investors take the time and make the effort to stay educated, adapting to any regulatory changes or economic trends.
Understand the Risks
Those choosing to invest in the stock or futures markets are inundated with myriad warnings regarding the inherent risks involved in investing. Numerous agencies, such as the Commodity Futures Trading Commission, require disclaimers to warn potential market participants about the possibility of loss of capital. While much of this is legalese, it has made it clear to people that investing in the stock or futures markets is risky; meaning, one can lose a lot of money. Greenhorn real estate investors, however, are more likely to be saturated with advertisements claiming just the opposite – that it is easy to make money in real estate. Prudent real estate investors understand the risks associated with the business – not only in terms of real estate deals, but also the legal implications involved – and adjust their businesses to reduce any risks.
Invest in a Reputable Accountant
Taxes comprise a significant portion of a real estate investor’s yearly expenses. Understanding current tax laws can be complicated and take time away from the business at hand. Sharp real estate investors retain the services of a qualified, reputable accountant to handle the business’s books. The costs associated with the accountant can be negligible when compared to the savings a professional can bring to the business.
Find Help When They Need It
Real estate investing is complicated and requires a great deal of expertise to engage profitably in the business. Learning the business and the legal procedures is challenging to someone attempting to do things on their own. Effective real estate investors often attribute part of their success to others – whether a mentor, lawyer, accountant or supportive friend. Rather than risk time and money solving a difficult problem on their own, successful real estate investors know it is worth the additional costs (in terms of money and ego) to find help when they need it and embrace other peoples’ expertise. (Don’t let a slow real estate market drag you down – steer clear of these pitfalls. To learn more, see 5 Mistakes Real Estate Investors Should Avoid.)
Build a Network
A network can provide important support and create opportunities to a new or experienced real estate investor. This group of associates can be comprised of a well-chosen mentor, business partners, clients or a non-profit organization whose interest is in real estate. A network allows investors to challenge and support one another, and can aid significantly in advancing one’s career through shared knowledge and new opportunities. Because much of real estate investing relies on experiential-based learning, rather than on reading a book, for instance, savvy real estate investors understand the importance of building a network.
| More from Investopedia.com |
Banks hold most of the cards in mortgage game
John Greenwood,
Financial Post
As providers of more than 60% of home loans in Canada the big banks are major players, determining everything from who gets to be a buyer to what people can afford to pay.
It’s no surprise that mortgages are the biggest single asset class held by the banks. According to the Bank of Canada, the chartered banks had $495-billion of mortgages on their balance sheets as of this month, or about half of all outstanding home loans — and that doesn’t include the billions of dollars of home loans that the banks have sold into the Canada Mortgage Bond program.
Mortgage finance is big business for the banks, and it’s also a cash cow for several reasons. For one, because banking is an oligopoly in Canada, players pretty much get to decide how much they will charge. Unlike the United States where thousands of lenders compete tooth and nail for business, the industry in this country is concentrated in the hands of the banks and the credit unions, with a handful of smaller players focusing on borrowers the banks don’t want to deal with.
Bill Downe, chief executive of Bank of Montreal, recently explained it this way to an investor conference: “We don’t believe we compete on price.”
Another reason banks like the business is because the riskiest mortgages are insured by the Canada Mortgage and Housing Corp., a Crown corporation. In the event of a worst-case scenario, it is the taxpayer who shoulders the risk of default. The idea is to make mortgages cheaper and therefore more affordable for those at the lower end of the income scale.
In practice the banks don’t pass on all the positive lift from government support to their customers.
“The system is founded on a sovereign entity that guarantees risky mortgages,” said Peter Routledge, an analyst at National Bank Financial.
Read More:
http://www.financialpost.com/
The Advantages of purchasing a Green Home
By Trevor Gloyn,
Postmedia News
With growing awareness around being green and making the right choices for the environment, it’s not surprising that more and more builders are constructing green homes.
In addition, homeowners are investing in upgrading their homes with green features to make them more energy efficient, comfortable as well as to increase the sales value.
All of this is good news for buyers who are looking for a home with a particular shade of green. Whether you’re looking at a home that is previously owned or one that is new, here are some things to consider:
- Insulation: Next to a mortgage, energy costs can be one of the most significant household expenditures. An energy-efficient home conserves energy by reducing heat loss during the winter and heat gains during the summer.
One of the best ways to reduce heat loss and gain is to ensure ceilings, walls and foundations are well-insulated and draft-free. Energy Star windows and doors will also help keep your heating and cooling costs down while improving comfort.
- Heating systems: A home with an older model heating system that operates at 65 to 75 per cent efficiency can realize significant cost savings by converting to a new energy efficient model that operates at 85 to 98 per cent efficiency.
Look for heating systems that use high efficiency motors as well to reduce electricity costs.
- Water-efficiency: Water is a precious resource. Newer front loading clothes washers can use far less water than older top loaders.
They can save on water heating and clothes drying costs too. Also, ask if the home has low-or dual-flush toilets and low-flow shower and faucet fixtures.
Water use can be further reduced by limiting the amount of water required to maintain lawns and gardens through the use of hardy, indigenous plants, capturing rain water for irrigation and limiting lawn area.
- Light fixtures: Energy-efficient lighting is an easy way to reduce your electrical consumption. Look for compact fluorescent lamps, which last up to 10 times longer than regular bulbs and use one-third of the energy.
- Durable building materials: When a building material requires frequent repair or replacing, it becomes both an environmental and economic burden.
Durable materials don’t need to be replaced or repaired as frequently and this reduces repair costs as well as the amount of resources consumed to supply the materials and the amount of material taken to landfills.
Look for things like exterior siding that doesn’t need frequent painting, roofing materials built to last for 20 years or more, and moisture-resistant finishes in bathrooms and kitchens.
- Indoor Air Quality: Choose materials and finishes that have low odour and low pollutant emissions. A ventilation system that provides fresh outdoor air and deals with moisture and odours can also help maintain a healthy indoor environment.
Mortgage insurance allows buyers to enter the world of home ownership faster by making it possible to purchase a home with a five per cent minimum down payment, rather than the 20 per cent that is typically required for an uninsured mortgage.
If you use CMHC-insured financing to purchase or build an energy-efficient home, or to carry out energy-saving renovations on an existing home, you may be eligible for a refund of 10 per cent of the mortgage insurance premium. For example, a borrower who obtains a typical $250,000-mortgage with a five per cent down payment can benefit from a mortgage insurance premium refund of about $690. qualified energy adviser and has been determined to have an energy efficiency rating of 80 or above.
Contact Us for more information on this and other “green” options available.