Monthly Archives: November 2011

Tired of the Stock Market Roller Coaster?


Did you Know that the S & P 500 Index delivered a whopping 3.71% return to investors over the last 10 years?  That is not an annual rate of return, but rather the total return over the 10 year period.

How do you think that compares to investing in real estate?  Well let me tell you… and I hope you’re sitting down!  Based on the average house price in Canada, over the same 10 year period, real estate went up 232%.

In dollars and cents that means if you invested $10,000 in the index, you would have earned $371.  That same $10,000 invested in real estate, would have earned you $23,200.  It gets better, the real estate earnings could be tax free if you invested in a principal residence! Invest today in something you know will be there in the future.  Real Estate has generated wealth for generations. The sooner you get started, the sooner you will start to enjoy the benefits and get off the investment roller coaster!

Our Real Estate and Mortgage Team can help you get started on the road to financial freedom.

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Posted by on November 28, 2011 in Uncategorized


Down Payment Options

As we all know to purchase a property there has to be a minimum down payment of 5% of the purchase price.  This can come from a few sources.  There are a few lenders that still have a 5% cashback program which can be used for the down payment.  The interest rate is generally at a 5 year posted rate but makes purchasing a home for someone who currently rents helps them achieve home ownership much faster than they can generally save for the down payment.

You can have the down payment gifted from an immediate family member.  There must be a letter from the donor demonstrating the funds are a genuine gift and are not required to be paid back.

You can also access the RRSP (Home Buyer Plan).  Under the Home Buyer Plan, you may be eligible to withdraw up to $25,000 tax free from your RRSP to use as a down payment. You can also withdraw an additional $25,000 from a spousal or common-law RRSP.  The money borrowed from the RRSP will need to be repaid over a period of 15 years after a 2 year grace period. If the cash is not paid back in a particular year it will form part of the client’s income for that tax year.  Neither the applicant or their spouse cannot have owned property in the 5 years prior to withdrawing money from their RRSP.  A written agreement to buy or build a home is required to withdraw any funds and it must be a primary residence.

Home ownership is one of the best investments one can make.  If acquiring a down payment to purchase one is something you struggle with, give us a call and let us see whether the cash back program could help you get into a home today.


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Posted by on November 14, 2011 in Uncategorized


Variable Rate Mortgages Currently on Their way Out

After years of showing clients how much they can save in interest by taking advantage of a variable rate mortgage today things have shifted in the other direction.  With variable rate mortgages changing from the prime minus to prime or prime plus really makes you question whether or not it is beneficial to take a variable mortgage as compared to a fixed rate mortgage.  The only thing that would still hold weight is what it would cost a client to break their mortgage.  By spending time with our clients and having a 5 year mortgage map in mind will help to determine which option is better suited for them and their life plan over the next couple years. This may change should the Bank of Canada change it’s prime lending rate or variable’s head back to the good old days or prime minus .25 all the way to prime minus .75%.  We as consumers could only hope variables head back to prime minus again but until things change fixed term mortgages are saving our clients the most amount of mortgage interest.  If your currently looking to buy or refinance ensure you factor which mortgage product is best suited to you and your situation because not all mortgages are created equal

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Posted by on November 8, 2011 in Uncategorized


Homeowners’ Best Solution for Home Sweet Home


This holds particularly true for consumers looking to take on home renovations, where open, revolving credit can prove expensive and potentially imprudent.


One product that may be the ticket for homeowner seeking to make their homes their own through renovations, because of the low interest rate environment, and because of the ease of managing one payment in terms of debt management.

CHMC offers a “Purchase Plus Improvements Program”- which offers solutions to home seekers, who feel that they have found their dream home- almost. This type of mortgage is particularly useful in centers where the supply of quality stock is limited, and purchasers are sometimes required to take a more active role to customize properties.

The way it works is this: After an offer to purchase conditional on getting approval for the program (which covers the purchase price of the home, plus the estimated cost of renovations), a contractor must provide an estimate for the expected total amount of the renovations.  CMHC will approve up to 95% of the total amount.

There is a caveat though- the renovations actually must improve the value and/or the structure of the house- so cosmetic touch ups need not apply.

What does the PPIP hold over a traditional line of credit? Less flexible repayment not withstanding  there are plenty of advantages:  “It is a cheaper alternative, provides a better cash, flow solution, (has) ease of payments (one vs. two), similar pre-payment privileges and will improve qualifying ratios for future credit.”

While the structure of the PPIP is among it’s best features for many homeowners, there are some things to think about when choosing a PPIP mortgage over a traditional LOC- namely flexibility. “The only advantage is that typically with a PPIP mortgage the lender asks to have the work completed within a 90 day time frame, with a line of credit you can complete the work at your own pace, or if some renovation items are best done in the summer (replacing an exterior door or window for example), then you can accommodate the timing easier.  That is the only advantage I can see using an unsecured line vs. a PPIP mortgage if you are buying high ratio.”

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Posted by on November 4, 2011 in Uncategorized


Markets Went on Quite the Roller Coaster

Markets went on quite the roller coaster ride last week as Europe worked towards the most comprehensive plan to deal with the fiscal problems that have been plaguing the continent for some two years now.

Heading into Wednesday’s summit, bond yields had dropped quite a bit as expectations for an agreement had fallen considerably by Tuesday afternoon. However, as word trickled out on Wednesday that something big was in the works, the bond market sold off aggressively, pushing yields higher. In all, the two day move in 5yr bond yields was approx. 0.25%.

Since then of course, everyone will have seen some headlines in the news citing analysts who question the ratification and implementation of Wednesday’s proposal. This has culminated in the news released Monday afternoon that Greece will take the proposal to a national referendum. Given the resistance to the ongoing austerity measures in Greece that everyone has witnessed, some concern has emerged with respect to the survival of the deal itself.

The above is a long way of saying bond yields fell sharply, rose sharply, and have fallen again sharply, leaving us practically unchanged on the week.

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Posted by on November 1, 2011 in Uncategorized