2011 Canada census: Young professionals, baby boomers fuelling Canada’s condo boom

Experts say fundamental shifts in population and lifestyle — couples putting off marriage and children, workers rebelling against tiresome, traffic-clogged commutes — are pairing with a growing backlash against urban sprawl to spur one of the most pronounced and sustained real-estate booms in recent history.

That explosion is, in turn, changing the shape and culture of Canada’s cities.

“It’s a combination of economic and demographic factors,” Condos present a more affordable option for first-time home buyers such as young adults and new immigrants. Empty-nesters looking to downsize to a smaller home are also driving the condo craze, but for lifestyle reasons more than financial ones.

Immigrants are our bread and butter and the census proves it -There are more of us — 33.47 million, according to the census. We need more young people in the workforce. We need them for our collective prosperity and, especially, to pay for our pensions, old age security and health care.  It is they who are primarily fuelling the boom in population and real estate in Toronto, Montreal and Vancouver, the three metropolitan areas that account for 35 per cent of our total population.

Toronto's suburbs are still booming- The city on Toronto’s outskirts grew by a whopping 56.5 per cent to 84,362 residents between 2006 and 2011, according to new Statistics Canada figures released Wednesday. Whitchurch-Stouffville: rank in at number three with a 54.3 per cent jump to 37,628 residents. Milton: is the fastest growing municipality in Canada grown 71.4%. Brampton also grew significantly, up 20.8 per cent to 523,911. Mississauga was up 6.7 per cent to 713,443. Toronto stood at 2,615,060 residents, up 4.5 per cent, with growth focused along the waterfront, the downtown core and several pockets across the city.

Young professionals, baby boomers fuelling Canada’s condo boom - the retired couples are part of the condo craze — lured by the promise of a life free of clearing snow and scooping out eavestroughs, drawn to the gleaming glass-and-steel towers and newly scrubbed factory conversions that are reshaping Canada’s urban lifestyle.

Condos present a more affordable option for first-time home buyers such as young adults and new immigrants, Empty-nesters looking to downsize to a smaller home are also driving the condo craze, but for lifestyle reasons more than financial ones.

GTA condo sales climb 24% to record in 2011 - A record 28,190 condos were sold across the GTA last year, up 24 per cent from the previous high set in 2007, says condo research firm Urbanation. The final quarter of 2011, at a record 7,226 units. Speculative buying, over-leveraging and “herd behaviour” as three risk factors that are hard to assess but could lead to a correction in Toronto condo prices.

The inventory of unsold suites has been creeping up. As of the end of last year, it stood at just under 15,000 units — about 18 per cent of existing condos — up from 12,272 in the first quarter of 2011. That’s still below the five-year 21 per cent average for unsold suites.

The most powerful attraction of downtown is after-hours nightlife that there wasn’t before, which attracts more people.

As more condos crop up and more people move in, the challenge will be to foster diversity within those fledgling communities, said David Gordon, an urban development expert at Queen’s University in Kingston. Otherwise, some areas could become enclaves for young professionals and affluent retirees, shutting out families and lower-income residents.

Planners in Edmonton are looking for developments with larger condos to draw families away from the suburbs.

The challenge at this point ... is to provide the park spaces and the schools and the infrastructure that’s necessary. If the schools aren’t open, Families aren’t going to move downtown.

Real Estate: 10 things you need to know

By Tony Wong - Business Reporter

Wed Mar 9 2011

Next to public speaking, buying or selling a home is at the top of many people’s fear and loathing list. A home is the biggest investment you’ll ever make and while exciting, the potential for things to go wrong is pretty big.

Here are 10 things to consider when buying a home.

1. The housing market isn’t really a market

At least not in the way you might think. While housing analysts like to compare real estate returns to stock market returns, it is a misleading comparison.

The first big difference is that a stock market is a place where you can by and sell immediately. In the real estate market you can wait months for the home you want to come on the market and just as long to find someone who wants to buy yours. The price you expect may not bear any resemblance to the one you get.

The long run return on stocks is also a lot better. The average stock in the Standard & Poors 500 index, a basket of blue chip U.S. stocks, has returned about 6.3 per cent a year after inflation in each of the last 25 years. The average increase in the value of a Canadian home over the same period petty much tracks the rate of inflation which during the same period was 2.5 per cent.

A home is also more than an investment. It has all kinds of intangible qualities, including a neighbourhood you want to live in, a spot with a particular view or landscape, a type of architecture that you enjoy. So, while it’s tempting to think of your primary home as a profit centre ripe for a flip, that shouldn’t be the main purpose.

Besides, your Microsoft stock can’t keep you warm at night. (Unless you bought it when Bill Gates was still working out of his garage. In which case, you probably have your own heating company.)

2. It’s always a good time to buy

No it isn’t. People who bought at the height of the market in the 1989 real estate bubble, didn’t break even until prices bounced back in 2002. That’s 13 years. And even then they didn’t make their money back. Factoring in inflation, they actually lost money. House prices don’t go up forever. Buy when your circumstances dictate, not because your neighbor the agent says it’s a good time to.

3. Location, Location, Location.

Yah, they’re right. You’ll pay more initially, but investing in a property in the good neighborhood close to transit will pay dividends down the road when it comes time to sell

4. Buy the cheapest house on the street

Some people argue you shouldn’t, because the home will compare poorly to the other homes when you sell.

I say go for it. It may already be discounted because it looks like a shack compared with other properties and provides far more upside if you spruce it up in the future. A rising tide can also help to lift all boats. As the street gentrifies, infill housing will continue to keep property values high. Getting your foot in the right address is half the battle. Hello Park Place!

5. Do I need an agent?

Yes, a good realtor can be a huge asset, everyone needs professional advice.

6. If you want an agent…

If you don’t have the time, or would rather use professional advice, a good realtor can be a boon, because they know the neighborhood and can potentially get you top dollar. But like any other service, the results will vary. So make sure you interview several before choosing.

7. Renovating will give me huge return

Stop watching all those television shows where some fancy designer redos the entire house in a week with faucets that cost more than your BMW. Okay, I like them too, but that doesn’t mean you have to gut your kitchen to sell your home.

Most experts say you’ll get the best bang for your buck by redoing the kitchen and washrooms. But even for the most sought after features by homebuyers, the return on investment is anywhere from 75 per cent to at best 100 per cent. That means in many cases if you spend $10,000 you’ll only add that much vale at best and maybe far less.

8. It just needs a coat of paint

When it comes times to sell, you may have been living in your home for so long that you don’t notice the coffee stains on the couch and the Sponge Bob wallpaper in the washroom. Get a second pair of eyes to have a look around. This could be friend, relative or your agent and hopefully they’ll tell it like it is.

You may want professional help in the form of a home stager who can arrange your furniture and make your place look showroom ready. But you don’t need to pay big bucks. Start by asking a friend. She’ll tell you why Sponge Bob must go.

9. Don’t try to time the market

I know people who sold their home at the peak of the market, and rented a condo while riding out the crash.

After the crash, they repurchased near the same neighborhood for substantially less. This is the dream of every home investor. I also have friends who thought the market was going to crash, so they waited for four years to buy a home. Prices kept going up and they finally threw in the towel and bought at a higher price than they expected. Then the market crashed. Housing is a long term investment, and sometimes you just have to commit.

10. Keep your perspective

My friends think think their 1,500 square foot semi is worth a bundle, because they spent hours building the deck and hand painting the cute gold cherubs on the walls.

Being emotionally attached to your home means that when it comes time to sell, your objectivity is compromised. In a down market, with more competing listings, your home is going to be difficult to sell and the price less than you expect. Can you accept that?



Toronto Star business reporter Tony Wong has been writing about real estate for the past 10 years.

27 Braydon Blvd - $559900

• 5 Bedroom with 3.5 Bath

• Living combined with Dining Boast High quality engineed finish Hardwood

• Open concept Kitchen and family walk out to backyard

• Huge backyard backs into Ravine adding summertime serenity.

• Approximately 3000 sq/ft of building area.

• Lot size is 104 x 100 ft

• Sale price includes Fridge,Stove, Washer, Dryer

• Full unfinished basement with seperate Entrance.

• Call me for further information



Living and Dining



Land Titles Act and Title Insurance

Virtually all property in Toronto and well more than half of the properties across Ontario are now registered under the Land Titles Act. Once title is recorded in a Land Titles parcel register, it is set and cannot change. There is no adverse possession or possessory rights under the Land Titles Act, so essentially you can only lose an interest in your property from this date forward in certain limited ways specified under the Land Titles Act. As well, the Land Titles Act has Section 155, which expressly provides that any registered disposition or mortgage that if unregistered would be fraudulent and void is, despite registration, still fraudulent and void. On top of that, there is a Land Titles Assurance Fund (the “Fund”) to deal with mistakes. So why would you even consider title insurance?

Since the Land Titles Act guarantees the title shown on its Parcel Register, if an innocent purchaser or mortgagee obtains an interest in the property after a fraud, it is protected. A true owner can lose his title or be subject to a mortgage under the Land Titles Act after a fraud.

The opposing view is that a residential Title insurance policy provides coverage after the date of the policy for forgery where someone else claims an interest in or a lien against the property. That clearly covers the real estate fraud we are reading about in the newspapers – forgery or identity fraud where someone purports to be the owner and then conveys the property to him or herself or a third party or mortgages the property. In addition, a title insurance policy, as an indemnity insurance policy, includes a duty to defend your title – to deal with the litigation related to such fraud. With title insurance you will not have to pursue any action yourself and then make a claim against the Fund.


Title insurance is a form of insurance that provides compensation for losses suffered from title issues even if they are not discovered until years after the sale is completed. Title insurance protects home buyers against unpredictable or undetectable problems related to your home’s title.


Risks covered by title insurance include unpredictable or undetectable issues such as forgery, fraud, missing heirs, unregistered rights-of-way and other issues that can affect rights of ownership. While real estate lawyers protect home-buyers with thorough record searches and inquiries during the home ownership transaction, they will also often arrange for title insurance to try to offset issues that could not easily be discovered and certain future problems.


If a problem arises with title that only becomes known after closing, title insurance can often compensate the home-buyer for the problem.

just here

there was atime I used to be full of life but everything changing day by day. I really wants to be happy but my thinking process wouldnt let me be happy. My be its my own faul which stoping me to be happy.

I tried all the tricks to forget unpleasentness created around me but its not helping me. How I want myself to stop thinking about everything except my real estate work. I really wants to forget about my children situation or mostly about their way of living or may its just my imegination that there is a problem. Since I am not able to fix any problem if there is any way I can stop this nonsense thinking of mine and just enjoy what is there. I need advise or some wisdom that make me understand why I am not able to handle these small hurdles in the life.

Are you Landlord ...?

I am one of you, a Landlord... We always want a good tenant who pays his rent without fuss and we can get  return on our investment without any fuss..

I just want to share few Residential Tenacies Act  which has been in effect from January 31, 2007,

The Residential Tenancies Act

2009 Rent Increase Guideline

Each year the Ontario government announces the province’s rent increase guideline for the following year. The annual rent increase guideline is the maximum percentage by which a landlord can increase the rent for most sitting residential tenants without approval from the Landlord and Tenant Board.

The 2009 guideline is 1.8 per cent.

The new rent increase guideline applies to a rent increase that begins any time between January 1, 2009 and December 31, 2009 and applies to most residential units in Ontario.

The 2010 guideline is 2.1 per cent.

The new rent increase guideline applies to a rent increase that begins any time between January 1, 2010 and December 31, 2010 and applies to most residential units in Ontario.

In most cases, the rent for a unit can be increased if at least 12 months have passed since the tenant first moved in or since his or her last rent increase. The tenant must be given proper written notice of the rental increase at least 90 days before the rent increase takes effect.

Who is responsible for maintaining the unit?

It is the landlord's responsibility to maintain the unit and ensure that it is in a good state of repair, even if:

• the tenant was aware of problems in the unit before they moved into it, or,

• the landlord puts into the lease that the tenant is responsible for maintenance.

However, the tenant is responsible for keeping the unit clean, up to the standard that most people consider ordinary or normal cleanliness. The tenant is also responsible for repairing or paying for any damage to the rental property caused by the tenant, their guests or another person living in the rental unit.

Notice to End a Tenancy

Landlord must give proper notice

A landlord can end a tenancy only for the reasons allowed by the Act.

In most cases, the first step is for the landlord to give the tenant a notice in writing that they want the tenant to move out.

There are proper forms a landlord must use for giving a notice to end the tenancy are available from the Board. There are different notices for different reasons.

Landlords must use the correct notice form and fill it out completely and accurately to ensure that the tenant receives all the information that the Act requires.

If the landlord does not give the tenant all the information required by the Act, the notice may be void.

And, if the landlord files an application to evict the tenant based on an incomplete or incorrect notice, the application may be dismissed.

Reasons for ending a tenancy

The Act allows a landlord to give a tenant notice to end the tenancy early if the tenant, the tenant’s guest or someone else who lives in the rental unit does something they should not do, or does not do something they should. This is sometimes called ending a tenancy “for cause”.

Some examples of “for cause” reasons for ending a tenancy are:

• not paying the rent in full,

• causing damage to the rental property,

• disturbing other tenants or the landlord, and

• illegal activity in the rental unit or residential complex.

There are also other reasons for ending a tenancy that are not related to what the tenant has done, or not done. These are sometimes called “no fault” reasons for ending a tenancy.

Some examples of “no fault” reasons for ending a tenancy are:

the landlord plans to do major repairs or renovations that require a building permit and the work cannot be done unless the rental unit is empty,

the landlord requires the rental unit because the landlord, a member of the landlord’s immediate family or their caregiver wish to move into the unit, and

the landlord has agreed to sell the property and the purchaser requires all or part of the property because the purchaser, a member of the purchaser’s immediate family or their caregiver wish to move into the unit. (This reason for eviction only applies in rental buildings with three or fewer units and in condominiums.)

When the landlord must give notice

Where a notice to end a tenancy must be given, the landlord must give the notice to the tenant before the termination date (the day the tenancy will end). The amount of advance notice depends on the reason for ending the tenancy.

Tenant’s remedy

For some of the for cause reasons for ending a tenancy, a tenant can prevent the tenancy from ending by stopping the behaviour referred to in the notice, or by doing what the notice requests. This is a called a tenant’s remedy. The notice explains what this is, and gives a deadline for the tenant to comply. If the tenant does what the notice asks them to do by the deadline, the notice to end the tenancy is then void. The landlord cannot apply to the Board to evict a tenant based on a void notice.

For those reasons for ending a tenancy that do not have a remedy, the tenant cannot do anything to void the notice. However, this does not mean the tenant has to move out.

If the tenant does not move out after receiving a notice to end the tenancy, the landlord can file an application to the Board to end the tenancy. The Board will decide if the tenancy should end after holding a hearing. Both the landlord and the tenant can come to the hearing and explain their side of the story to a Member of the Board. (For information about when a landlord can apply to the Board see the Application to the Board section).

Application to the Board

Applying for approval to end the tenancy

A landlord can apply to the Board for approval to end a tenancy if:

• the landlord gave the tenant a notice to end the tenancy,

• the landlord and tenant have an agreement to end the tenancy,

• the landlord wants to evict an unauthorized occupant,

• the tenant gave the landlord a notice to end the tenancy,

• the tenant breached a condition of a Board order or mediated settlement and the order or settlement allowed the landlord to apply to end the tenancy,

• the tenant abandoned the rental unit, or

• the tenant was the superintendent and the superintendent’s employment has ended.

If there is a tenant remedy, the landlord cannot file an application to the Board unless the tenant fails to correct the behavior referred to in the notice, or fails to do what the notice requested, by the deadline set out in the notice.

Where the tenant does not have a remedy, the landlord can file their application as soon as they give the notice to the tenant.

Deadline to apply

In most cases, there is a deadline by which the landlord must file their application to the Board.

Most, but not all, landlord applications must be made within 30 days of the termination date set out in the notice. However, there is no deadline for making an application to terminate a tenancy where the landlord has given the tenant a Notice to End a Tenancy Early for Non-Payment of Rent (Form N4).

New Fee for Landlord Applications

As of April 6, 2009, the fees for landlord applications for evictions and for applications to collect arrears was raised from $150 to $170 per application. The fee for all other applications remains the same.

Mortgage Guide for Canadian

You are new in Canada , ready to buy your dream home and you know what type of house you want, which location you want to  live for next 10yrs or so. You went to bank for mortgage pre approval and bank has approved you certain amount with lot of terms and condition that you find it confusing to understand. No wonder we are not experties in every field...

Following are the few facts and figure that will give you better understanding of some of the intricases of Canadian  Mortgage.

 Different type of Mortgages and Further more

• OPEN MORTGAGES

An open mortgage allows you to pay off part or the entire mortgage at any time without penalties. Open mortgages usually have short terms of six months or one year. The interest rates are higher than those for closed mortgages with similar terms.

• VARIABLE RATE MORTGAGES / ARM (ADJUSTABLE RATE MORTGAGES)

At the start of a variable rate mortgage, the lender will calculate a mortgage payment that includes principal & interest. For the term of the mortgage your payments usually do not change. However, as the prime rate changes so will your mortgage rate.

If interest rates are dropping, less of each payment will go toward interest and more will go toward principal. If interest rates rise, more of your payment will be interest and less money will be reducing your principal.

Some of these mortgages are completely open (you can pay off all or part of your mortgage at any time without penalties). Others that offer a 'prime minus' interest rate (e.g. prime - 0.375%) may charge a penalty.

The interest rate on most variable rate mortgages is compounded monthly.

• CAPPED RATE MORTGAGES

These are variable rate mortgages that the lending institution has rate 'capped'. In other words, the rate will fluctuate with prime, but the institution guarantees that you will not pay more than a certain interest rate, set by them.

These mortgages often have a penalty for early 'payment in full' and are often not portable.

• CLOSED MORTGAGES

The expression 'closed mortgage' originates from the 1980's when this type of mortgage was literally 'closed'. You contracted to the lender to make your payments for the term chosen, you could not pay anything additional, nor could you pay off the entire amount for any reason except the sale of your property.

These days, there are many ways to pay down your mortgage principal quicker, though the name 'closed' mortgage still remains. See pre-payment options for ways to pay off your mortgage quicker.

• FIXED RATE MORTGAGES

Fixed rate mortgages are the most popular type of mortgage. You benefit from the security of locking in your mortgage interest rate, for lengths of time ranging from 3 months up to 25 years. The rates are slightly lower than for an open mortgage for the same term.

If you think interest rates could rise, you may want to choose a longer term, such as a 5 or 10 year term. If you think that rates are going lower, you may want to gamble on a shorter length of time. Discuss this with your mortgage broker.

The major lending institutions have different pre-payment options allowed under their contracts. These options allow you to pay off your mortgage faster. It is also possible to pay off most closed mortgages prior to the end of the term or pay down a portion of the balance owing. However, lenders charge penalties for doing so.

Please note that some lending institutions will not give any pre-payment options. It is wise to find out what options are available before entering into any mortgage contract.

• CONVERTIBLE MORTGAGE

These are fixed rate mortgages for terms of 6 months or 1 year. Not all lending institutions offer convertible mortgages. With a convertible rate mortgage you can lock into a longer term during the current term of your mortgage without penalty - but only with the same lender. For example, if after a couple of months you hear that interest rates are going to increase, you may change to a longer term mortgage such as the 5 year term.

• REVERSE MORTGAGE

CHIP - Canadian Home Income Plan is the name of the company providing reverse mortgages in Canada.

A reverse mortgage allows homeowners to convert equity in their homes into cash, without selling the property or having to make monthly payments.

To qualify, homeowners must be at least 62 years old, have significant equity in their property and live in B.C. or Ontario.

The amount that can be borrowed depends on the homeowner's age. Reverse mortgages are for between 10% and 40% of the appraised value of the home. The older the homeowners, the more they can borrow.

The homeowner retains ownership and possession of the house. The lending company registers a reverse mortgage against the property. At death, or when the house is sold, the loan and the accrued interest must be repaid.

The biggest disadvantage to reverse mortgages, is that the interest keeps building on the amount of money borrowed (hence the maximum 40% loan). This means that if you borrow $50,000 this year and your interest bill is $5,000, next year your interest will be charged on $55,000 and so on. The longer the loan is in place, the greater the interest bill that has to be paid.

It is possible that when the house is sold, 100% of the proceeds from the sale may be required to pay off a loan.

If the homeowner dies the estate will have to pay off the loan and the accrued interest. This may wipe out any inheritance for the homeowner's heirs.

An alternative is to establish an equity credit line. This allows you to take funds only as you need them, thereby owing the least interest possible, with no surprises.

Consult with a financial advisor for more alternatives.

Variable rate mortgages (VRM's) are they all the same??

The simple answer is no and the fact is that a lot of people don’t realize it.

The most common mistake people make when getting a variable rate mortgage (VRM) is clients just focus on the current rate or discount below prime, yet often clients who take variable rate mortgages are planning to lock in their VRM when they feel rates are going to start moving upwards again in say 12 to 18 months.

The problem is when do you decide to lock in the VRM to a fixed mortgage? Are there penalties or fees to the lender? And at what rate do you lock in? Do you get the current discounted rate or the lenders posted rate?

You have to remember that the majority of the time a variable rate mortgage is actually a closed mortgage. The lender has you tied up and is less likely to be aggressive on the discount. There are few lenders that guarantee in writing up front that you get their lowest advertised rate at the time you lock in so long as you lock into a fixed rate mortgage of 3 or more years.

So if you are in a 5 year term and you decide to lock in your rate and you have 3 years remaining, which was more important, the discount below prime on the variable rate mortgage or the rate you lock in at, for 3 to 5 more years?

Ask your Mortgage Specialist to help you to put together a plan that will not only help you today but down the road as well.

If you're looking for ways to pay off your mortgage quicker, you have three basic options:

• Reduce your amortization period,

• Increase your monthly mortgage payment

• Change the way you make your payments.

If changing the way you make your payments sounds appealing, than accelerated bi-weekly mortgage payments might be just the ticket.

Not to be confused with semi-monthly mortgage payments (24 payments per year)

Accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it's guaranteed to save you a significant amount of money over the term of your mortgage. (Explained in detail in next para)

Let me explain to you further :

Each institution has different rules on the amount, and when, you can pay down on your mortgage.

Some lenders combine the totals from 'additional mortgage payments' with 'lump sum payments'.

Please discuss the current policies of the different institutions with your mortgage broker.

PREPAYMENT OPTIONS

Any additional payment made on your mortgage will end up saving you lots of money in interest. Every normal payment you make consists of principal and interest. The balance owing on your mortgage determines how much is interest. As the balance outstanding reduces, less of your payment goes to interest and more comes off the balance.

For example:

THE FOLLOWING ARE WAYS TO REDUCE THE AMOUNT YOU OWE ON YOUR MORTGAGE:

INCREASING THE FREQUENCY OF YOUR PAYMENTS :

As I explained above most lending institutions offer you the choice of payment frequency.

The most common is :

• MONTHLY : such as the 1st of every month. This is easy to remember if you are used to paying rent.

Most lending institutions will let you make payments on a different date if that is more convenient for you - for example the 15th day of every month.

Other options generally available are:

• SEMI-MONTHLY

Payments are taken twice a month, usually on the 1st and the 15th.

Payments are one half of the monthly amount.

If you pay $1,000 per month X 12 months = $12,000 in payments per year

With this option you pay $500 twice a month - $500 X 24 = $12,000.

This option saves you very little money because you are paying the same annual amount, just a little bit quicker. See comparison for an example of the savings.

• BI-WEEKLY - accelerated (saves lots of money!)

How do accelerated bi-weekly mortgage payments work and how can they help pay my mortgage off quicker?

Payments are exactly half of a monthly payment amount, collected every two weeks.

For example if the monthly payment is $1,000 then the bi-weekly payment will be $500.

This saves you money because you pay an extra $1,000 over a twelve month period.

HOW?

Payments are made on the same day every 2nd week.

At least twice a year you will have three payments in the month.

Stated another way;

If you pay $1,000 per month X 12 months = $12,000 in payments for the year, but if you pay bi-weekly then it is $500 X 26 = $13,000.

The amount of interest is the same, therefore, the additional payment of $1,000 (or the amount of YOUR monthly mortgage payment) will be deducted from the balance owing on your mortgage.

You will also make an extra small deduction from the mortgage balance because you are making small payments faster than if they were larger, once a month payments.

This is a very easy payment plan to keep up with if you receive a pay cheque every 2 weeks. If you are paid monthly, or semi-monthly (1st & 15th) bi-weekly payments can be very difficult because of the extra payments twice a year - your income won't change, but your mortgage payment will be 1 1/2 times normal (e.g. instead of $1,000 you will have to pay $1,500). See comparison for an example of the savings.

Here's how it works.

Let's say you have a mortgage of $100,000, an interest rate of 5.00% and an amortization period of 25 years. Your monthly mortgage payment would be $581.60 and your total payments for a year would be ($581.60 x 12) $6,979.20.

To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 / 2 = $290.80). Then take that payment and multiple it by 26 to arrive at your total of all payments for the year ($290.80 x 26 = $7,560.80).

There's the difference. Using the monthly mortgage payment plan, you've made a total of $6,979.20 worth of payments for the year, while using the accelerated bi-weekly mortgage plan you've made $7,560.80 worth of payments, a difference of $581.60. Basically with accelerated bi-weekly mortgage payments, you're making one additional monthly payment in the year.

Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and a total savings on interest, over the life of the mortgage, to just over $12,000.


• BI-WEEKLY - not accelerated (does NOT save lots of money!)

The $1,000 a month payment is multiplied by 12, then divided by 26.

This equals a bi-weekly payment of $461.54 - at the end of the year you will have paid $12,000 !

A very small amount of savings are gained due to half of your payment being made early each month.

The main reason for choosing this option would be the convenience of matching your payment to your pay days, with lower payments than the accelerated version.

• WEEKLY - accelerated (saves lots of money!)

Same as bi-weekly accelerated, except that payments occur on the same day every week. Your payments will be one quarter of your normal monthly payment.

If you pay $1,000 per month X 12 months = $12,000

Then you will pay $250 per week X 52 weeks = $13,000

You pay an extra $1,000 per year, which will be deducted from your mortgage balance.

Sometimes there are 5 weeks in the month and you will have 5 payments in that month. This will happen at least 4 times a year. See comparison for an example of the savings.

• WEEKLY - not accelerated (does NOT save lots of money!)

The $1,000 a month payment is multiplied by 12, then divided by 52.

This equals a weekly payment of $230.77 - at the end of the year you will have paid $12,000 !

A very small amount of savings are gained due to three quarters of your payment being made early each month. The main reason for choosing this option would be the convenience of matching your payment to your pay days, with lower payments than the accelerated version.

LET’S COMPARE THE ABOVE PAYMENT PLAN

The table below shows a comparison of interest saved and the length of time this takes,

assuming: a mortgage of $142,772.35 at 7% for an original amortization of 25 years.

* this table only shows the savings for the accelerated versions of weekly & bi-weekly payments. The not-accelerated versions will save approximately the same amount as the semi-monthly payment.

PENALTY CHARGES

This is the most difficult topic related to mortgages and it will continue to be confusing until the laws in Canada are changed to require consistency on how lending institutions charge their penalties.

Most lenders charge an early payoff penalty on closed mortgages if the debt is paid prior to the maturity of the term. The lending institution must describe the penalty they could charge on the mortgage document.

The most common penalty is:

The greater of three months interest penalty OR the interest rate differential.

In other words, whichever amount is the larger of these two figures will be your penalty.

• THREE MONTHS INTEREST PENALTY

If you are paying off your mortgage before the maturity date, most lending institutions charge three months interest penalty (or an interest differential penalty).

Your present mortgage balance is multiplied by your current interest rate and multiplied three.

• INTEREST RATE DIFFERENTIAL / LOSS OF INTEREST

This usually means the difference between the interest rate on your mortgage contract compared to the rate at which the lending institution can re-lend the money.

For example:

If your mortgage has a balance of $125,000 at 9.25%, you have 2 years left to go and the current 2 year mortgage rate is 6.25%. Then the lending institution will probably charge you -

$125,000 X 24 months X 3% (9.25 - 6.25) = $7,266.21

However, just to further confuse the issue, the penalty above has not been present valued. This is when a lender charges a lower penalty because you are paying all of the 'extra' interest (in the example 3%) now, not over the remaining term. Some lenders present value, other lenders do not.

10/10 15/15 20/20 - Payment Plant

These numbers refer to the percentage the lending institutions will allow you to increase your payments by, or the percentage amount allowed as a lump sum payment.

• INCREASING THE AMOUNT OF YOUR PAYMENTS

Most lending institutions will allow you to increase the amount of your mortgage payment, some allow an increase once per year others only once per term.

The amount of this increase varies from 10% to 20% depending on the lending institution.

For example: If your present mortgage payment is $1,000 per month you may be able to increase it to $1,200 per month ($1,000 X 20% = $1,200). The extra payment amount reduces your mortgage principal, therefore paying your mortgage off faster.

The disadvantage of this benefit is that the increase is usually permanent (until your next renewal date), so you have to be very sure that you can afford this increase.

Please discuss the current policies of the different lending institutions with your mortgage broker.

• PAYING EXTRA ON YOUR PAYMENT DATES

Sometimes referred to as 'double-up' payments.

Most lenders will allow you to make additional payment amounts on your mortgage. These extra amounts are principal only and reduce your mortgage balance and so you pay off your mortgage faster.

The best thing about this benefit is that you are in control of how much extra you pay, and when you pay it.

There are some limitations which vary by institution, but generally speaking you can pay up to double your normal mortgage payment on any (or all) of your payment dates.

Please discuss the current policies of the different institutions with your mortgage broker.

• MAKING LUMP SUM PAYMENTS

Most lending institutions will allow you to make large lump sum payments against your mortgage principal. These amounts are principal only and reduce the balance owing.

The amounts vary by institution, some are up to 20% of the original mortgage amount. So if you borrowed $120,000 originally, they will allow you to pay up to $24,000. This is usually allowed on only one occasion per year.

PROMOTION :'CASH BACK' MORTGAGE

Several lending institutions offer a 'cash back' incentive for choosing them as your mortgage lender.

The amount of the 'cash back' is a percentage of the mortgage amount you are borrowing - usually 3%. For example, if you borrow $100,000 you could receive as much as $3,000 back from the lender.

There are several negative aspects to these offers.

• You will probably pay the full posted interest rate.

• You cannot use the funds as part of your down payment.

• If you pay off the mortgage before the end of the term you will have to repay the lender some of the 'cash back' money.

The advantage is, you can choose how to spend the cash you receive. For example, you may have too much credit card debt and by paying down your debt you may qualify for a bigger mortgage.

Perhaps you need new furniture, or to make some improvements to your new house.

Is the amount of money you receive on these mortgages worth it?

The following comparison shows the difference between receiving cash now, versus saving money over the term with a discount on the mortgage rate.

Most mortgage brokers are able to get you up to a 1% discount on the posted mortgage rates.

As you can see, you will save more money over the term by getting a lower interest rate.

You really need to decide if you need the money now, or if the lower monthly payment and lesser interest paid is more important.

Discuss your situation with your mortgage broker to see which is the best for your circumstances.



Mortgage Broker vs Bank Specialist


You always wonder what is the best? Where to go ? Bank or Broker?

There are actually a number of differences which you may not be aware of.

Heres some information to help you understand.

• A Mortgage Broker works for you, the client, whereas Bank Specialists are employed by the financial institution.

• The benefit of using a Mortgage Broker is the fact that they have the ability to offer you mortgage products from a number of financial institutions. Because a Bank Specialists works for the bank, that means that they can usually only offer you their institution’s products.

• Brokers are typically paid the same amount no matter what rate is offered to the client. Bank specialists rate of pay is generally reduced in direct relation to the amount they discount your rate from the bank’s posted rate.

• Depending on your Province, Mortgage Brokers must be licensed and are subject to a strict set of requirements. Accredited Mortgage Professionals (AMP) must take continuing education courses in order to maintain their accreditation. Bank specialists are not licensed and require no formal training.

• Because Mortgage Brokers don't work for a specific lender, your assured that you will be given impartial advice. A bank specialist has a limited number of their own institutions products and while it may not be the best mortgage product out there, they will do their best to sell you their institutions mortgage product cause if they don't your going somewhere else.

• Mortgage brokers use their knowledge and experience to negotiate the best possible rate and product for you from a number of lenders. When you see a bank specialist, that mortgage negotiating is typically left up to you.

• For conventional financing, the services of a mortgager broker are generally provide at no cost to you. If there is a cost, you will be advised of those costs up front.

So in conclusion, if you have the ability to use the services of a professional Mortgage Broker and have that Mortgage Broker do all your mortgage leg work at no cost, why would you not take advantage of the offer?

FYI, Today, 75% of people in the United States use mortgage brokers. Because the Mortgage Brokerage Industry is relatively new in Canada, the numbers are lower, however, those numbers are increasing every year.