Tag Archives: real estate

How Long Should it Take to pay off a Mortgage?

“The faster you pay off a mortgage, the more you save in interest,” says Louis-François Éthier, product manager at National Bank.

The truth is, paying off a $100,000 mortgage in a short period of time is extremely difficult without both a sizable and stable income, and relatively few expenses. A small regular payment stretched out over a longer amortization period (the total time required to pay off the mortgage) is usually considered an expensive strategy. This is because mortgage payments mostly cover interest and little of the principal until the interest is paid, so it can take decades to pay off the balance.

“The amount of your mortgage payments should be based on your overall budget,” says Louis-François Éthier.

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How much of your budget should go toward mortgage payments?
Most financial institutions recommend that no more than 30% of your total budget go towards mortgage payments, municipal taxes, and heating. “It’s the classic ratio in the industry: mortgage to total debt,” says Mr. Éthier. “It’s crucial to also consider other debts, such as car loans and balances on credit cards. Mortgage counsellors can help you make the right choice.”

Of course, the expected time if would take to pay off the mortgage directly influences the amount that we spend on our regular payments. Continue reading

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Residential rental property – a good investment?

What are the first things you should ask yourself before buying rental property?
First of all, will you live there or not? From a fiscal point of view, if you are renting out the entire property, you could deduct all of the day-to-day expenses related to the building from your income. But if you’re an owner-occupant, only expenses related to the rental units will be deductible. On the other hand, when you go to sell, the portion of the building occupied by the owner is exempt from capital gains tax. If it is completely rented out, all of your capital gains will be taxable.

In addition, when you have a specific property in mind, you need to consult the assessment roll to ensure that the number of units on the realtor’s listing is correct. If a livable basement is considered to be a dwelling by the city, this counts as one more unit. If this is the case, you might have to make a bigger downpayment.

Speaking of which, how much of a downpayment do you need for this type of purchase?
If you’re renting out all of the units, you need to make a minimum downpayment of 20% of the building’s purchase price.

If you’re going to be an owner-occupant, you could lower the downpayment to 5% of a duplex’s purchase price with mortgage loan insurance. For a triplex or quadruplex, you’ll need to put down a minimum of 10%.

The rules are the same for all Canadian financial institutions. Continue reading

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Durable and strong

The expression “invest in stone” used to mean to invest in construction and real estate. Why? Because real estate is a strong and durable sector. Like stone.

Is there a more natural, more resistant, more sustainable and stronger material than stone? It’s practically eternal. Not surprising that it is among the materials of choice in this era of green living.

Stone is abundant in nature. It is recyclable, waterproof, porous and requires little maintenance, which keeps it far away from numerous chemical products. It filters pollution by absorbing carbon dioxide, the main gas behind the greenhouse effect. Another important asset: it’s fire-resistant.

Stone reduces energy consumption in a house by storing the heat for redistribution as needed. It is a natural heat regulator, since it combats temperature variations. In Quebec, however, this ecological advantage is lesser because insulation separates the exterior stone wall from the interior. But lesser does not mean nil. A stone floor exposed to the rays of the sun in winter will slow this ecological loss.

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Elsewhere in the world, in certain mountainous regions, crushed stone is piled around foundations of homes to deal with the violent winds and extreme winter temperatures. These crushed stones heat the inside in winter and cool it off in summer.

Stone is not perfect. Its mining, at times its transformation and shipping result in a considerable energy expense, given the weight and mass of the material. These operations release a good dose of carbon dioxide into the air. Therefore, it’s preferable that the stone be mined in the region itself. The shorter the journey, the more the material becomes ecological. Fortunately, Quebec has numerous quarries, including the granite and marble quarries in the Mégantic region, and slate in Saint-Marc-du-Long, the largest quarry in North America according to Wikipedia.

 

References:

French Wikipedia article on slate
Habitat sain et écologique, Ginette Dupuy, Les éditions Quebecor, 2011, 295 pages

Guide de la maison verte, Michel Durand, Les éditions La Presse, 2008, 339 pages

 

Photos: iStock.com

An excellent year for the real estate sector despite a rocky economic situation

After home sales failed to meet expectations in 2014, many analysts gave a cautious forecast of only a 2% increase in sales for 2015. However, despite several economic ups and downs, the real estate sector performed surprisingly well across Quebec this past year.

Key interest rate, depreciation of the loonie and jobs

To everyone’s surprise, at the start of the year, the Bank of Canada decided to reduce its key interest rate to 0.75%, which led to lower mortgage interest rates. The impact of this change resulted in shorter terms and generous rate discounts. What’s more, in July 2015, the Bank of Canada further reduced its key interest rate to 0.50%. While this second decrease had a less dramatic effect on mortgage rates than the first, it did encourage Canadian banks to reduce their preferred rates, which gave a boost to the Canadian economy.

Among other factors influencing the housing market, the job market proved to be particularly resistant to economic fluctuations, with over 80,000 jobs being created in Canada over the course of the year.

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Higher sales than expected with slight price increases

While many anticipated growth in home sales of just 2% in 2015, as mentioned above, by mid-2015, that figure had already reached 5%. The Québec Federation of Real Estate Boards (QFREB) even forecast a rate of 6% or 7% by the end of the year, with some 75,000 properties sold, and the Canadian Mortgage and Housing Corporation (CMHC) agreed. Continue reading

Helpful Tips of the Month from BMO

Get to know these four people when buying a home. Assemble your dream team for a winning result.

Whether you’re a first-time homebuyer or getting ready to buy your second or third place, making a move can be exciting. But, it also can be intimidating and a bit overwhelming when you consider the many steps you need to take before picking up your new keys.

Fortunately, it’s a lot easier when you work with professionals who know the ins and outs. So consider reaching out to these four individuals during the home-buying process.

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  1. Real estate broker: You may think looking for potential homes is something you can do on your own. However, first-time buyers and even more experienced buyers can benefit from hiring a real estate professional. They can help you find listings that specifically fit your criteria, including listings that may not be advertised, as well as provide insight into the market. Plus, they can help you negotiate things like price, the date you can take possession and any extras you want included like repairs, furniture and appliances.
  2. Lawyer or notary: A lawyer or notary may act as an advocate on your behalf throughout the home-buying process. They will help coordinate everything from drafting and negotiating the contract of the sale to examining inspection reports and mortgage documents. Hiring a lawyer or notary early in the home-buying process can save you time and risk.
  3. Home Inspector: It’s to your benefit to hire a home inspector to look over the home before you buy. A home inspection may cost an average of $450 (may vary by province). But it’s often money well spent, because a home inspector can alert you to issues you may not see on the surface, like problems with the roof, plumbing, electrical, heating or cooling, windows and doors and foundation. Make sure to hire a certified home inspector, ideally with a background in engineering and experience doing home surveys in the area where you are buying.
  4. Mortgage Specialist: Last, but not least, having a working relationship with a trusted mortgage specialist is essential during the home-buying process. He or she can help review your finances and determine a price range that is realistic for your budget, as well as help you decide what type of mortgage is right for your situation and how much you can afford for a down payment.

Continue reading