Investor Insight: Tax 101 For Basement Units

Want to buy a house with a basement suite?  For most people this is a good way of getting your mortgage paid down.  It can make good money sense to have half or more than half of your mortgage payments, paid by someone living in your basement. You also get a bonus of having tax perks with your basement suite.

If you are thinking about a mortgage with a basement suite, give me a call.  There are some options for this type of mortgage.

Mortgages with a low rate
Mortgages with a fixed rate for a 10 Year Term- still under 4%
Purchase Plus Improvements - borrow extra money to make a suite or update a suite
First Time Home Buyer


Investor Insight: tax 101 for basement units


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Angela Kroemer, AMP
Mortgage Professional
TMG The Mortgage Group Canada Inc.
TMG Sharie Marie Mortgage Team
1.250.650.4182
akroemer@mortgagegroup.com
www.KroemerMortgages.com
Your Mobile Mortgage Professional in The Comox Valley

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No downpayment-- read on

Stop Paying Your Landlord’s Mortgage! Own Your Own Home

The thousands of dollars in rent you’ve paid to your landlord may be a staggering figure— a figure you don’t even want to think about. Until now, buying a house hasn’t seemed possible; it didn’t seem to be in the financial cards for your foreseeable future. Or is it? This situation is common: countless people feel trapped their home rental, pouring thousands of dollars into a place that will never be their own—they think they’re unable to produce a down payment for a home in order to escape the rental dilemma. However, putting the buying process into motion isn’t as impossible as it may seem. No matter how difficult you believe your financial situation to be, there are a few key facts that can help you make the step from the renter’s rut, to your own home-owning paradise!

Initially, of course, the most daunting factor involved in buying a house is the down payment. You know you’ll be able to handle the monthly payments—you’ve done this, and possibly more, for years as a renter. The hurdle, instead, seems to be accumulating the capital needed to put money down. Here’s the good news - this hurdle may be smaller than you think. Take a look at the following points and explore whether any of these scenarios may be possible for you:

1. Find a mortgage broker to assist you with your options for accessing different lenders.

Mortgage brokers have access to more than just one lender, usually they deal with over 40. Some of those lenders will work with clients to get them into a house with various options available for down payment and closing costs.

2. Buy a home even if your credit isn’t top-notch

.

If you have saved more than the minimum for a down payment, or can secure the loan against other equity, many lending institutions will still consider you for a mortgage, despite a poor credit rating. And working with a mortgage broker we only obtain one credit bureau to save you rating from multiple inquiries.

3. Find a seller to assist you in buying and financing the home.

Some sellers may be willing to bear a second mortgage as a seller take-back. The seller then assumes the role of the lending institution, and you pay him/her the monthly payments, rather than paying the price of the home in a lump sum. This is an additional option if you have a poor credit rating.

4. Federal Government First Time Home Buyers Plan (HBP).

Canada Revenue Agency now allows first time home buyers to withdraw up to $25,000 from your RRSP contributions to put towards your home purchase. There are specific guidelines for this program which can be found at cra-arc.gc.ca.

5. Create a cash down payment without going into debt.

You may borrow the down payment from a loan or a line of credit. As long as you can service the repayment amount this is a viable option. You may also be gifted your down payment from a family member as long as it is genuinely a gift and it is in your account 15 days prior to the closing date. You may also have a co-signer on the application to increase the strength of your application for approval.

You now know, there are options. The next step is to educate yourself on what your own personal possibilities might be and how to follow through with this goal. You should be pre-approved for your mortgage before searching for a home. The process is free and doesn’t place you under any obligation. Its simple, you can be pre-approved over the phone! Once a credit application is submitted, you’ll receive a written pre-approval, which will guarantee you to a specific dollar range or mortgage amount. When you have the pre-approved mortgage amount, you’ll know the price range to look in. Make a commitment to break out of the renting rut. Start today! Call Angela to get started on buying your home!!!!!

www.mortgagegrp.com

Angela Kroemer, AMP
Mortgage Professional
TMG The Mortgage Group Canada Inc.
TMG Sharie Marie Mortgage Team
1.250.650.4182
akroemer@mortgagegroup.com
www.KroemerMortgages.com
Your Mobile Mortgage Professional in The Comox Valley

Headlines About Mortgages- Google Alerts

About a month ago, I learned about Google Alerts. It is a very handy tool to have.

Monitor the Web for interesting new content
Google Alerts are email updates of the latest relevant Google results (web, news, etc.) based on your queries.
When using google alerts you go to http://www.google.com/alerts

It can also be used as a security measure. Many Realtors listings' have been hijacked. These guys take the listings and advertise  the house is for rent for a great price. Almost too good to be true. Renters pay them rent and of course the house is not for rent and the renters have lost their money. T
For google alerts, you can put in as many alerts you like. So in the Realtors case, they would put the address of the house listings and their name. So if anyone on the web is advertising any of those items the Realtors would get an alert that the address is being used or their name is being used.

So for me of course, I have an alert for Mortgages In Canada. Comes to my email box once a week.
Mortgages are big news. The headlines sell papers. Articles get read especially the doom and gloom articles. Below are a few headlines I read this morning from just 1 google alert:

Mortgage market tiptoes toward subprime
Canada home prices fall in March, sales up-CREA
Be very afraid of the Canadian housing bubble
Vancouver weighs on market as average Canadian home sale price falls
Canada Home Resales Rise 2.5% M/M in March, Up 1.6% Yr/Yr

The great news is there is news. You can read several articles with a different opinions, helping you educate yourself in the subject of mortgages. Or you can be like some and be afraid of these headlines, and not think about going for a mortgage when the rates are at a all time low.

What a lot of these articles are trying to articulate is this :

Interest Rates are Low= Low Mortgage Payments
Interest Rates are Low=You can buy a more expensive house with the same earned dollars
Property values are high which means that property values may decline for a few years
Interest Rates can only go up or stay the same depending on the economy
Interest Rates will go up and you won't be able to requalify for a new mortgage at the end of your 5 year term

Now depending on your situation, it may have a good outcome or a bad outcome.

If you bought your house and rates are the same but property values drop, this would only affect you if you wish to sell short term. The housing market corrects itself. 

The big one that most are writing about is that Interest Rates will go up and when it is time to renew, the mortgage payments will not be affordable or you will not qualify. Plus if property values take a dive you will be in double jeopardy of losing your house. You will owe more than what your house is worth and you will not be able to afford the new higher interest rate payments. Yes, just like in the United States.

I have a solution for that. It is called a low interest rate term of 10 years. Most people take out terms of 5 years and in the next 5 years no one knows what will happen with rates, property values,job security, etc. The market may not have enough time to correct itself.

With a 10 year rate it is long term. You will have 10 years of equity in your home. If you have made the maximum prepayments each year you will be farther ahead. You will have 10 years of the same low payments. Right now under 4%.  After 10 years of payments- you will not owe more than what the house is worth, you will have equity in your home, you will qualify for another mortgage with higher interest rates.(assuming you earn the same or more). It is a good situation to be in. So if you are not a gambler, and want a more secure , stable long term payments, give me a call or email me and we can sit down and talk about the 10 year mortgage term. Also for those that have a home and want to refinance to a 10 year term, give me a call and lets work out the numbers.



Angela Kroemer, AMP
Mortgage Professional
TMG The Mortgage Group Canada Inc.
TMG Sharie Marie Mortgage Team
1.250.650.4182
akroemer@mortgagegroup.com
www.angelakroemer.blogspot.ca

www.KroemerMortgages.com
Your Mobile Mortgage Professional in The Comox Valley

House Debt or Other Consumer Debt -Will The True Villian Please Stand Up

In the last couple of months, there has been several news worthy stories of house debt and other consumer debt. There are 2 groups lobbing the government to curb the other's debt vehicle.  Debt as a whole can be misused if it is not properly maintained. It just takes one or two life events for your debt to get away on you.

So the 2 school of thoughts lately is that house debt will get people into trouble and on the other side is Other Consumer Debt will be the evil debt getting people into trouble.

Lets take a closer look at each school of thought and see which one is the true villain.

1. House Debt interest rate around 3.29%
House Debt is the amount of money that you borrow to pay for your house. Right now the interest rates are at the all time lows, meaning you can buy a more expensive house with the same income dollars.
How can this be a problem in the world of Debt Villains, some of the problems are:
-if you lose your job you may not be able to make the payments (normal in every case)
-when you renew, the interest rate may be substantially higher and you may not be able to afford the payments,
-housing prices may fall and then again you may not qualify on what you owe to renew your mortgage. If you owe more than what the house is worth, no financial institution will loan you an extra amount of money if they cannot recoup it.

2. Other Consumer Debt interest rate around 23%
Other Consumer Debt is credit card, line of credit,vehicle purchases,buy now pay later, etc. This debt is used by the majority of Canadians to basically buy what they want- when they want it. There usually is very little to show for it except high interest payments.
-credit cards especially have a high interest rate. |Most people buy STUFF with no value after the fact.  If you lose your job you would have nothing to sell to help pay off most of the credit cards.
-many Canadians have a few credit cards  and shuffle payments from one to the other
-easy to get, especially if you are a young Canadian wanting to get into the credit game.
-If you do happen to buy items that you can resale- resale value may be 25-50% of actual cost if you are lucky.

While trying to figure out which  debt is the villain, I looked at the amount of debt. A house costs so much more than an average Canadian can put on a few credit cards. But, a house can be sold to recover most of the cost of the loan. Where as credit card debt, there is nothing to recoup. Average loss with a house or credit card debt on a bad case scenario may be around $30,000-$50,000. So that would be the same loss. But, there is one rule in Canada when a house gets sold by the financial institution and the house is sold at a loss, the loss can be recouped. The ex- owners still owe the outstanding bill. In this case the Other Consumer Debt is the Villain.

One fact that cannot be hid under the rug is there is always a resale value on a house, not so for the credit card debt.

 Another fact is  every person who buys a house with less than 20% down, has to buy default insurance, the House Debt becomes a better bargain then the Other Consumer Debt .

If you take it one step further and look to see which group has the most to lose if the Governmnet made changes to either one, you will quickly see the credit card group has the most to lose, with all their profits in their high interest rates. 4% versus 23%. That would be a whole lot of interest profits lost.

The real losers in this issue are the low to middle income bracket. They will have to save yet even more for a downpayment, plus if the amortization years are lowered they will have bigger monthly mortgage payments. These two points will likely take away any chance of being able to get into their own home.

The next time you come across a news story suggesting that rules on mortgages should yet again be tightened up, ask yourself why credit card companies are allowed to give credit out freely, as well as, gouge the average consumer with abusive interest rates.

Angela Kroemer, AMP
Mortgage Professional
TMG The Mortgage Group Canada Inc.
TMG Sharie Marie Mortgage Team
1.250.650.4182
akroemer@mortgagegroup.com
www.KroemerMortgages.com
Your Mobile Mortgage Professional in The Comox Valley

After Living In The Same Area For 17 years.....

After Living In The Same Area For 17 years.....
This is what I have learnt.

Living in Courtenay BC has been very good for me. It is a small enough town where you can be anywhere in 15 minutes, but big enough to have the variety of small businesses and big box stores.

I bought my house on top of Ryan Road Hill.  Ryan Road was basically a thru way for people getting to the Base from other parts of Courtenay.  There was lots of bush to walk through and lots of deer to see.

Looking out my window, I noticed, I now have a mountain view. In the winter when all the trees had no leaves on them, I had mountain glimpses if the winds were blowing the right way. With  all the building down the hill on the left side of Ryan Road, it gave me a view. Bonus when I sell.

 I now can walk to stores within 5 minutes. This part of Courtenay has built up- not in a fast pace though but none the less I have almost anything I need in walking distance now.  Across the street we have the College and Swimming Pool.  Down the street  Home Depot, Costco and soon to be Thrifty's.  Our bus system has been updated, now they do not do the round Courtenay and Comox circuit. Any time I used to use the bus it would take a hour to get where I was going and a 20 minute walk to not use the bus. I usually chose the walk unless I had heavy items I did not want to lug.

 I chose my house in a good area and luckily it continues to be a good area. It was not skill, it was by chance. Unfortunately, other people who chose their houses were not so lucky.  Even though they knew industrial type of building would happen I believe they thought there would be more of a area between their houses and the businesses. All night long they listen to either Home Depot trucks or Costco Trucks and soon to be Thrifty's Foods trucks. Lots of complaints to City Hall. In the day time people behind the College listen to the trades building all day.  Welding, hammering and the likes, can be very hard to drown out. These houses were there before the businesses and they were not cheap.  While the businesses have bent over backwards to cut down on the noise, there is still noise in the middle of the night. 

I am lucky, except for some increased traffic on Ryan Road, everything built up here is a bonus when I sell my house. None of them are in my back yard.  Mountain views, short walking distance to College, Pool, Grocery Stores, Golfing, Home Depot and Costco, Church services at the College or School on Sundays.

So the important lesson I learned when choosing my next home is when buying a home be careful especially if the area is not built up already.  In all cases check with the city to see what zoning  is around the area of your home-to-be, check for long term plans, or you may  get a Costco or Thirfty's  literally in your back yard.


Angela Kroemer, AMP
Mortgage Professional
TMG The Mortgage Group Canada Inc.
TMG Sharie Marie Mortgage Team
1.250.650.4182
akroemer@mortgagegroup.com
www.KroemerMortgages.com
Your Mobile Mortgage Professional in The Comox Valley

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