Archive | June, 2012

Chattels and fixtures and lawyers, oh my!

June 27, 2012

0 Comments

We got an interesting call at the office yesterday: my partner’s client arrived at his new home to find that the vendors had taken the furnace with them. When my partner called the seller’s lawyer to ask for an explanation, he explained that the furnace was a chattel, was not included in the agreement, and did not have to stay in the house.

I thought this would be a good opportunity to discuss what exactly a chattel is, and what makes it different from a fixture. An easy way to visualize it is this: if you flipped your house upside down and shook it, anything that stayed in place would be a fixture. Kitchen cupboards, bolted in mirrors, water softeners, and, yes, furnaces. All of these are fixtures, and are presumed to be sold with the house unless specifically excluded.

Chattels, on the other hand, are movable. They are light fixtures, curtains, furniture, etc. – all of the things that make the house your home. Even appliances are generally considered chattels, and must be specifically included or they are presumed to go with the vendor to their new home.

So back to our furnace issue: a furnace is essentially attached to the house. It takes considerable effort to remove it. The matter isn’t resolved yet, but hopefully our client will have his furnace, his fixture, back shortly.

Cesia

Cesia is a real estate lawyer at Wall-Armstrong and Green, a boutique law firm in Barrie focusing on real estate and estates. When she’s not online, she can usually be found in her garden.

More Posts - Website

Continue reading...

A Review of “The New Mortgage Rules”

June 25, 2012

0 Comments

As you’ve probably heard, there were a plethora of changes directed at the mortgage industry last week by Finance Minster Jim Flaherty along with the OSFI (Office of the Superintendent of the Financial Institutions of Canada). This is the 4th time since the credit crisis in 2007 that the Department of Finance has clamped down on mortgage lending.

The changes announced by Finance Minster Jim Flaherty are specifically directed at anyone wishing to get a mortgage with less than 20% equity (and these changes are scheduled to take effect on July 9th, 2012):

  • Mortgages will no longer be allowed to be spread out with a 30-year amortization, with the new max now set at 25 years.  This chops the maximum theoretical mortgage by roughly 9%!
  • Those wishing to refinance their house to pull equity out will now only be allowed to refinance to 80% LTV (Loan-to-Value) instead of 85%.
  • The government will limit the maximum Gross Debt Service (GDS) ratio to 39% and Total Debt Service (TDS) ratio to 44% (GDS does not currently apply to those with a credit score over 680, but many lenders have their own internal limits that they use already).
  • The government will ban mortgage insurance on properties valued over $1 million (this doesn’t affect many of us in Barrie, but think of our neighbours down in Toronto, or out west in Vancouver! $1 million doesn’t buy near as much in those 2 cities as it does here.

In addition to those changes the OSFI also released mortgage underwriting guidelines. Here’s what is changing (note: these changes only apply to federally-regulated lenders):

  • The maximum loan-to-value on a HELOC (Home Equity Line of Credit) will drop from 80% to 65%. Unfortunately this means more people will be saddled with high-interest debt (like credit cards, etc) that they can’t refinance into a lower-interest line of credit. This will also slow home improvement spending (sorry Home Depot & Rona). If you were thinking of building a new deck or remodeling the kitchen, and hoping the equity in your home was going to pay for it, you’ll need at least 35% of your home paid for to access the equity with a HELOC.
  • The qualifying rate for fixed terms less than five years and all variable rates is being raised to “the greater of the contractual mortgage rate or the five-year benchmark rate published by the Bank of Canada.” Basically, if you want a variable-rate mortgage or a fixed rate at less than 5 years, you’ll need to at least qualify at the 5-year benchmark rate (which is currently at 5.24%).
  • All self-employed borrowers must provide “reasonable” income verification (ie. a Notice of Assessment). Most lenders were asking for more income verification for self-employed individuals already, so this is more of a formality than anything.
  • “Cash back” should not be considered part of a down payment (basically eliminates 100% financing).

If you want to read more about the repercussions of these changes, there’s a fantastic post over at CanadianMortgageTrends.com: 20 Observations on the New Mortgage Rules.

So, what do you think about all the changes?

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

More Posts - Website

Continue reading...

How to find a real estate lawyer

June 20, 2012

0 Comments

In Ontario, if you want to buy or sell a home, you are required to go through a lawyer as only licensed and insured real estate lawyers are entitled to register transfers of property. There is extra insurance required to practice real estate law in Ontario, and so not all lawyers can transfer property.

The Law Society of Upper Canada has a lawyer directory that you can use to determine if the lawyer you have in mind is real estate insured. Simply enter the person’s name, click on the search result, and see if they are marked as insured (you can see my entry by clicking here and entering my name).

Finding an individual lawyer is probably the trickier part. Most people will seek out referrals from their realtor or mortgage broker, or friends and family, which allows you to find someone who has been vetted by someone you trust.

Cesia

Cesia is a real estate lawyer at Wall-Armstrong and Green, a boutique law firm in Barrie focusing on real estate and estates. When she’s not online, she can usually be found in her garden.

More Posts - Website

Continue reading...

Payment Frequency

June 18, 2012

0 Comments

When going through the details of a mortgage, many clients are frequently surprised that they have so many different options for payment frequency. Most assume you can only pay monthly or bi-weekly, but there are actually a bunch of different options available.

Monthly (12 payments per year): You all know this one – you make a payment once a month on a set day during the month (i.e. the 23rd of every month).

Semi-Monthly (24 payments per year): In this case you make 2 monthly payments (exactly half of what your monthly payments would be) on set days during the month (i.e. the 5th and 20th of each month).

Bi-Weekly (26 payments per year): Bi-weekly payments are made every 2 weeks (a convenient option for many people who get paid every 2 weeks). For example, your mortgage payment would come out every other Friday (bi-weekly payments are always on the same day of the week – every other ____day).

Weekly (52 payments per year): I think you can guess where this one is going – make a payment every week, on the same day of the week.

Accelerated Bi-Weekly (26 payments per year): This (popular) accelerated program is an amalgamation between the semi-monthly and bi-weekly payment frequencies. Basically you pay the semi-monthly payment (which is slightly higher than the bi-weekly payment) at the bi-weekly frequency. In essence, you end up making a month’s worth of extra payments each year (but in little tiny doses every other week).

Accelerated Weekly (52 payments per year): Similar to the accelerated bi-weekly, but you make half of the semi-monthly payment every week (which again is slightly higher than the normal weekly payment), which also results in making a month’s worth of extra payments each year (but in even smaller weekly doses).

 

The benefits of the accelerated programs are obvious: pay a little bit extra every payment, pay a LOT less interest on your mortgage over time. On a typical Canadian mortgage, the difference between an accelerated bi-weekly payment schedule and a regular bi-weekly payment schedule is almost $30,000 (and mortgage-free 3.5+ years sooner) – all by paying just slightly more per month.  Next time you’re working out the details of your mortgage with your bank or mortgage broker (first home purchase, refinance or renewal!), make sure to discuss the various payment frequencies – it can literally save you tens of thousands of dollars.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

More Posts - Website

Continue reading...

Simple Ways to Live a “Greener Life”

June 15, 2012

0 Comments

This is a guest post by Caroline Doherty of Century 21 B.J. Roth Realty.

 

The economy has shifted and people are more interested than ever in living “GREEN”. There are so many more things we can do in our day to day lives than consuming less energy and conserving water.

Many environmentally and budget friendly ideas hail from the post war days. Grandma always reused tinfoil, wax paper, and bread bags. She greased cake pans and baking trays with the butter wrapper she kept in the fridge. She turned stale bread into stuffing, bread pudding and French toast. She minced any leftover meat and made shepherd’s pie. Nothing went to waste, so if you think like grandma would have done, you might be inspired to reuse, recycle and repurpose.

Be sure and remember you can do these types of things outside as well as in. Think about starting your own compost bin in that corner of the yard you never use. Start using a rain barrel to capture and reuse water, your garden will thank you for it.

I’ll leave you with this… why use chemicals and pesticides that are harmful to humans, pets and the environment if you could use an alternative, non-toxic option. Here are five great tricks to ward off home and garden pests:

  • Diatomaceous Earth is one of the safest pesticides for ridding homes and gardens of unwanted insects. This fine, soft powder looks harmless, but under a microscope is actually made up of tiny glass-like shards. As pests such as ants and cockroaches crawl over the earth, they are injured and eventually dry out and die. Diatomaceous earth is available at most garden centers.
  • Beer is a natural way to prevent slugs from chewing garden plants. Pour beer into a shallow plastic container and leave it in your garden overnight. Slugs will be attracted to the beer, fall in and drown.
  • Dish soap mixed with water and sprayed on plants will help control aphids. Leave the mixture on plants for approximately 30 minutes before washing off.
  • Boiling water, when poured between the cracks of pavement stones, will help to destroy weeds and ants.
  • Mint is an effective natural pest deterrent. Plant it in your garden to ward off mice, ants, fleas, flies and moths. Gardeners recommend planting mint in pots and then placing into bedding soil – mint can take over your garden if allowed to grow freely.

Think, live… go Green!
Thank you to my sources: Melanie Wren – Our Homes Magazine & Century 21 Canada

Guest Authors

BarrieRealEstateTalk.ca occasionally features guest posts from a variety of real estate professionals around Simcoe County. This is one of those posts (check out the top of the article to find out who contributed this article!).

More Posts

Continue reading...