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Home Ownershipis the Key to Your
Future Joanne Lozinski
Sales Representatives
RE/MAX Professionals Inc.
905-270-8880
Real Estate is unlike any other commodity
And here’s why…And here’s why…Real Estate
• Principal residence Tax Free• Practical
(everyone requires shelter)• Offers security
(temporarily unemployed) Now you’ve got extra room Take in a boarder Help with the payments Your house is appreciating
in value and you’re continuing to build equity
Other commodities
• Taxable• You can’t raise a family
living in a mutual fund• Less Secure
(you lose your job)
Limited space Cash in your stocks and
bonds Pay your landlord and up
with 0
5% Down-Payment Plan5% Down-Payment Plan
Why NOW is the Time to Buy
Low Interest RatesLow Interest Rates
RRSP & Home Buyers PlanRRSP & Home Buyers Plan
In the 1980’s the minimum down-payment required to purchase a home was 10%
The current 5 year mortgage rate is 5.33% lower than the past 20 year average
Repay back over 15 years in equal installments
May borrow up to $20,000.00 each from RRSP
The minimum required down-payment today is 5%!
The average mortgage rate for past 20 years 11.08%
What does that equate to in dollars and cents?
11.08%
$250,000(mortgage)
$2,464.76(per month)
5.45%
$250,000(mortgage)
$1,527.77(per month)
Difference of $936.99 per month savingsDifference of $936.99 per month savings
Market Trends and Prices
1985 - $109,094
1986 - $138,925
1987 - $189,105
1988 - $229,635
1989 - $273,698
1990 - $255,020
1991-$234,313
1999 - $228,372
2000 - $343,255
2001 - $251,508
2002 - $275,331
2003 - $293,067
2004 – $314,661
2005 - $335,971
1992 - $214,971
1993 - $206,496
1994 - $208,921
1995 - $303,028
1996 - $198,150
1997 - $211,307
1998 - $216,815
1989 Market highly speculatedOver-built, over-inflated
Interest rates 14%Price adjustment
Average Price of Single Family Dwellings in the GTA
Why Real Estate is a good investment
Over the past 36 years real estate has increased 1470% Average Price of Single Family Dwelling 1980-2004
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
This chart represents average price trends for houses in the Toronto area during the last 24 years. House prices clearly peaked in 1989 and bottomed out in 1996.
Data from Toronto Real Estate Board
Toronto Real Estate Board Historical Stats
1966
$21,360
2004
$315,231
1986
$138,925
1996
$198,150
1976
$61,389
2005
$335,791
Historically Real Estate has proven to be an
excellent investment It is a hedge against inflation It can provide excellent collateral It is easy to liquidate It provides an avenue for forced
savings It’s value increases over timeYour principal
residence is a tax free gain
Historically Real Estate has proven to be an
excellent investment
1986 - $143,9002004 - $462,000tax free gain of $318,000
1986 - $119,9002004 - $345,000tax free gain of $225,100
Renting vs. Owning
With rent increasingMortgage rates decreasingProperty values increasing
There is absolutely NO benefit to rentingNO
At a rental rate of $1,200.00 per month it will cost you At a rental rate of $1,200.00 per month it will cost you $60,000.00 in rental payments over a 5 year term!!$60,000.00 in rental payments over a 5 year term!!
Retrofit Most existing two-unit houses (built before Nov. 16, 1995) will be "grandfathered" (continue to be allowed) under the new legislation, provided they meet applicable municipal planning standards. As well, two unit houses should have met Fire Code requirements by July 14, 1996. In general, new apartments must comply with the Building Code, and existing apartments must comply with the Fire Code. Both new and existing apartments must comply with certain property and municipal zoning (planning) standards.
It would appear your best protection is to obtain a certificate of compliance from the local fire department for any property that might fall under the jurisdiction of the Fire Code, Section 9.8. You should obtain a building permit before starting any new construction. If you don’t obtain a permit, or a certificate of compliance, the dwelling unit could possibly be non-conforming, and therefore considered illegal.
Also, municipalities have the right to decide where they will allow homes to have additional dwelling units and can designate areas where they will not allow homes to have additional dwelling units. Units installed after November 16, 1995 without a permit are unprotected (even if they meet fire, safety & electrical standards) and the municipality could require removal of the unit.
TREB District Map
Click on map to view
larger section
Housing Types and Styles - Townhouses
Condominium Townhouses
Monthly maintenance fees usually range from $140.00/mo - $210.00/mo. This fee includes exterior maintenance & building insurance.
SECOND FLOOR
GROUND FLOOR
THIRD FLOOR
SECOND FLOOR
GROUND FLOOR
BASEMENTBASEMENT
Freehold TownhouseNo Maintenance fee. You own the land.
CRAWL SPACE BASEMENT
LOWER LEVELFAMILY ROOM
MAIN LEVELLIVING ROOM
UPPER LEVELBEDROOMSBEDROOMS
Different Types of TownhousesDifferent Types of Townhouses
Free Condo Townhouse
Also includes a maintenance fee that is usually less than the standard condo townhouse. This fee includes general landscaping but you are responsible for exterior maintenance of the building.
Tw
o S
tore
y
Mu
lti-
Level
Th
ree
Sto
rey
Housing Types and Styles - Townhouses
Typical TownhouseTypical Townhouse
2-Storey Townhouse
Freehold Townhouse
Multi-Level Townhouse
3-Storey Townhouse
Freehold Condo
Housing Types and Styles - Semi-Detached
Attached by Common Wall or GarageAttached by Common Wall or Garage
Bu
ng
alo
w
Rais
ed
B
un
galo
w
Th
ree S
tore
y
Tw
o
Sto
rey
GROUND FLOOR
SECOND FLOOR
THIRD FLOOR
BASEMENT
Mu
lti-
Level
Fron
t S
plit
Five L
evel
Back
split
GROUND FLOORGROUND
FLOOR BASEMENTBASEMENT BASEMENT
GROUND FLOOR
SECOND FLOOR
Fou
r Le
vel
Back
split
Th
ree L
evel
Back
split
MAIN LEVELLIVING ROOM
MAIN LEVELLIVING ROOM
MAIN LEVELLIVING ROOM
MAIN LEVELLIVING ROOMMAIN LEVEL
LIVING ROOM
UPPER LEVELBEDROOMS
UPPER LEVELBEDROOMS
UPPER LEVELBEDROOMS
UPPER LEVELBEDROOMS
BEDROOMSBEDROOMS
LOWER LEVELFAMILY ROOM
LOWER LEVELFAMILY ROOM
LOWER LEVELFAMILY ROOM
LOWER LEVELFAMILY ROOM
CRAWL SPACE CRAWL SPACE
CRAWL SPACE CRAWL SPACEBASEMENT
BASEMENTBASEMENT
BASEMENTSUB-BSMT BASEMENT
Housing Types and Styles - Semi-Detached
Attached by Common Wall or GarageAttached by Common Wall or GarageTypical Semi-DetachedTypical Semi-Detached
Bungalow
Multi-Level5 Level Backsplit4 Level Backsplit
2-Storey 3 Level Backsplit
Raised Bungalow
3-Storey
Housing Types and Styles - LinkAttached by footing or garageAttached by footing or garage
Lin
k b
y
Footi
ng
Lin
k b
y
Gara
ges
BASEMENT
BASEMENTBASEMENT
BASEMENT
GROUND FLOOR
GROUND FLOOR
GROUND FLOOR
GROUND FLOOR
SECOND FLOOR
SECOND FLOORSECOND FLOOR
SECOND FLOOR
Housing Types and Styles - LinkAttached by footing or garageAttached by footing or garage
Typical LinkTypical Link
Link by Garage
Link by Footing
Link by Garage
Link by Garage
Link by Garage Link by Footing
Link by Footing
Link by Footing
Housing Types and Styles - Detached
Bungalo
w
2
½ Sto
rey
SECOND FLOOR
3rd FLOOR
4 L
evel Sid
esp
lit
Fro
nt
Split
Five L
evel
Back
split
Fou
r Le
vel
Back
split
Thre
e L
evel
Back
split
MAIN LEVELLIVING ROOM
MAIN LEVELLIVING ROOMMAIN LEVEL
LIVING ROOMMAIN LEVELLIVING ROOM
UPPER LEVELBEDROOMSUPPER LEVEL
BEDROOMSUPPER LEVELBEDROOMS
BEDROOMS
LOWER LEVELFAMILY ROOM
LOWER LEVELFAMILY ROOMLOWER LEVEL
FAMILY ROOM
CRAWL SPACE CRAWL SPACE
CRAWL SPACEBASEMENT
BASEMENTBASEMENT
BASEMENTSUB-BSMT
Tw
o S
tore
y
1
½ Sto
rey
Rais
ed
Bun
galo
w
2nd FLOOR SECOND FLOOR
GROUND FLOORGROUND FLOORGROUND FLOOR
GROUND FLOOR GROUND FLOOR
BASEMENT BASEMENTBASEMENT BASEMENT BASEMENT
3 L
evel
Sid
esp
lit
LOWER LEVELFAMILY ROOM CRAWL SPACE
MAIN LEVELLIVING ROOM
UPPER LEVELBEDROOMS
4 L
evel Sid
esp
lit
CRAWL SPACE BASEMENTBASEMENT
SUB-BSMT
LOWER LEVELFAMILY ROOM
LOWER LEVELFAMILY ROOM
MAIN LEVELLIVING ROOM
MAIN LEVELLIVING ROOM
UPPER LEVELBEDROOMSUPPER LEVEL
BEDROOMS
Housing Types and Styles – Detached
3 Level Sidesplit
Raised Bungalow
2-Storey 2 ½ Storey
4 Level Sidesplit 4 Level Backsplit 5 Level Backsplit
Bungalow 1 ½ Storey
Typical DetachedTypical Detached
The Home Buying Process
10 Steps10 Steps
1.Pre-approval2.Price
determination3.Buying profile4.Product
availability5.Viewing and
feedback
6.Offer7.Negotiations8.Waivers9.Closing10.Agency
Mortgage Pre-Approval
Before we even begin to investigate the marketplace we must have a pre-approved mortgage in place. We can arrange for you to meet with our mortgage consultant at a mutually agreed upon time. Most of the preliminary information can be done over the phone.
Our mortgage consultant will shop for the absolute best rate and terms possible to suit your needs.
What You Need To Apply For A Mortgage
Credit Check (done with your initial pre-qualifier)
Salary letter from
employer(and/or T4 slips for the past two years)
If self-employed, financial
statements & income tax returns for the past two years
List of assets and liabilities
(including account numbers)
Verification that the down payment came from your own resources(ie. Bank account, gift letter)
Copy of agreement of
purchase and sale Copy of the listing Survey
Mortgage Financing
CMHC• Less than 25% down
payment• Under Canadian Law all high
ratio mortgages (less than 25%) down must be insured through CMHC.
• This fee ranges anywhere from 0.5% to 3.25% of the mortgage amount which varies according to your down-payment.
• This mortgage insurance is only for the protection of the lender should there be a default in the loan.
Two Types of LoansTwo Types of Loans
Conventional Mortgage
• 25% or more down payment• Under Canadian Law lending
institutions cannot provide first mortgages in excess of 75% of the value of the property.
Loan Amount as a % of the Value of the Home
Purchase Premium on Total Loan
Premium on Increase to Loan Amount for Portability and Refinance *
Up to and including 65% 0.50% 0.50%
Up to and including 75% 0.65% 2.25%
Up to and including 80% 1.00% 2.75%
Up to and including 85% 1.75% 3.50%
Up to and including 90% 2.00% 4.25%
Up to and including 95% 2.75%
Insurance Premiums
CMHC Insured Mortgage
Purchase Price $250,000.00Down-Payment $12,500.00Mortgage Amount
$237,500.00Insurance Fee (2.75%) $6,531.25Actual Mortgage $244,031.25
The insured portion of the mortgage
is subject to Provincial Sales Tax
ExampleExample
Associated Costs
Deposit - The standard deposit that is submitted with an offer is usually about $5,000.00. This can be adjusted if necessary according to your specific financial situation.
CMHC Insurance Fee - CMHC fee is subject to PST.
Appraisal Fee - CMHC appraisal fee is $235.00, Conventional loans the fee will vary anywhere from about $75.00 – 150.00.
Land Transfer Tax - This is a tax that is paid by the Buyer when any property in Ontario is transferred. Under a purchase price of $250.00 the fee is calculated at 1% of the purchase price less $275.00.
Associated Costs
Building Inspection - Will vary from about $250.00 – 325.00
Legal Fees (Estimated)
Lawyer $450.00Mortgage $200.00Disbursements
Title Search $100.00Executive % Sheriff’s Certificate $100.00Tax, Building & Hydro Certificates $150.00 – 200.00Adjustments Vary
Land Transfer Tax (see next page)
You may wish to discuss the benefits of title insurance with your lawyer
VALUE TAX
VALUE TAX
VALUE TAX
VALUE TAX
$150,000 $1225 $220,000 $1925 $290,000 $2825 $450,000 $5475
$160,000 $1325 $230,000 $2025 $300,000 $2975 $460,000 $5575
$170,000 $1425 $240,000 $2125 $325,000 $3350 $470,000 $5675
$180,000 $1525 $250,000 $2225 $350,000 $3725 $480,000 $5775
$190,000 $1625 $260,000 $2375 $375,000 $4100 $490,000 $5875
$200,000 $1725 $270,000 $2525 $400,000 $4475 $500,000 $6075
$210,000 $1825 $280,000 $2675 $425,000 $4975 $550,000 $7475
Land transfer tax is a provincial tax payable on the purchase of a home. This tax is paid by the Buyer and is calculated as follows:
0.5% of the first $55,000 plus 1.0% of the amount from $55,001 to $250,000 plus 1.5% of the amount from $250,001 to $400,000
plus 2.0% of the amount in excess of $400,000
Land Transfer Tax Table
Typical Closing Costs
Typical Closing Costs on a purchase of Typical Closing Costs on a purchase of $250,000.00 $250,000.00
5% Down Payment5% Down Payment
Legal Fees (all Inclusive) $1,000.00
Land Transfer Tax $1,725.00
Appraisal (CMHC) $235.00
PST on insured portion $617.50
Building Inspection $321.00
Typical Closing Costs
It is usually safe to assume that on a $250,000.00 purchase $4,000.00 will adequately cover all of your closing fees. The only time this may be higher is in the case of a property tax adjustment.
For example: If you purchase a home closing in February and the Seller had pre-paid the taxes until June, he would be credited the amount pre-paid.
The building inspection fee is due at the time of the inspection.
The CMHC fee is due at the time of the application.
Price Determination
Price range will be established based on the results of your meeting the mortgage consultant.
Although you may qualify for a loan amount higher than what you anticipated, you may choose not to purchase up to your maximum qualification level.
Staying within your comfort zone may be more suitable to you.
Product Availability
Our main frame database will source available listings in the price range, area and with the features you have requested.
Our data is updated frequently throughout the day.
We will keep you fully updated on all new properties as they become available.
SelectionsOur job is to assist you in selecting those properties that suit your needs.
Through the process of elimination, we will choose those homes that represent the best value.
At any give time there will be only a handful of homes that you will even consider.
Power of Sales
• Owner defaults on loan• Lender takes property back
Scenarios1. there is more mortgage owing on the property than what the
property is worth2. there is equity in the property that must be returned to the
Seller.
The lender must try to obtain the best price for the home.
Viewing & Feedback
Appointments will be made to view the most appropriate homes.
Asking questions and taking notes will prove to be very beneficial.
Feedback is critical in order to ensure that we are on the right track.
Express your thoughts!
1. Usually an owner will ask between 2 – 4% above market value for the home, therefore there is usually some flexibility in the asking price.
2. Sometimes an owner will price his home very close to or even slightly under what comparable homes have sold for, therefore there is usually very little if any flexibility. Usually these properties attract all the attention and in many cases generate more than one offer.
3. Depending on condition, location, upgrades, etc. some homes will sell for more or less than comparable homes.
A CMA will be prepared for you advising you of recent market activity in the area.
How much do we offer?
Negotiations
Who is representing you?Who is representing you?
Under Buyer-Agency it is our duty and obligation to represent you – OUR CLIENT.
Our Goals and Objectives are to get you the best possible home at the best possible price with the least amount of hassles.
What is an Agency Relationship?
It is the relationship an agent has with his/her client/customer.
Sub-Agent works with the Buyer but for the Seller. Buyer-Agent works with the Buyer and for the Buyer. Dual-Agent works for neither the Seller nor the Buyer. This
situation would arise when the Buyer and Seller Agent are the same real estate firm.
All prospective Buyers have the right to representation. Agency Relationships must be disclosed to all parties involved.
Waivers & Follow-Up
Once your conditions have been fulfilled they are removed from the offer via waiver and the deal becomes firm and binding.
We look after forwarding all of the paper work to your solicitor and mortgage consultant.
Meet with mortgage consultant
Choose a lawyer
Arrange for moving company
Arrange for utility transfer/hookup+ house
insuranceArrange for keys
Arrange for school enrollment
Change of address at post office
Checklist
Helpful Resources
Canadian Mortgage and Housing Corporation
Multiple Listing Service
The Canadian Real Estate Association
ICX - Commercial Listings across Canada
The International Real Estate Federation
Terra Nova Financial Services Inc.
Thank You
Joanne Joanne LozinskiLozinski
Sales ConsultantSales Consultant
RE/MAX RE/MAX Professionals Professionals
Inc.Inc.
905-270-8840905-270-8840