A speciAl Advertising feAture by MediA plAnet no.1/september 2010 MortGaGes 3 TIps BUILDING HOUSES, CREATING HOPE MCAp joins forces with Habitat For Humanity to provide Canadian families with more than just mortgage advice PhOtO: McaP fixed vs. variable Observation Housing trends in Which rate is right the food that the gtA for you? makes your downtown fringes children smart in high demand 2 · septeMber 2010 A speciAl Advertising feAture by MediA plAnet CHaLLenGes TIp 1 CHOOse THe RIgHT FeATuRes FOR We RecOMMenD YOuR Variable vs. MORTgAge Fixed doug conick explains how to determine which is right for you. pAge 4 “flexibility can at least be as important as rate.” PhOtO:haBItat FOR hUManItY Mortgage ABC’s p. 4 Know the ins and outs of buying a home. Canada may have avoided the worst of the mortgage crash Mortgage brokers An unexpected way to look beyond the bank. p.10 that plagued the United States during the recession. But there are still changes you should be aware of. MOrtgAges 1st editiOn, septeMber 2010 Country Manager: gustav aspegren the world of mortgages email@example.com editorial Manager: Jackie McDermott firstname.lastname@example.org Responsible for this issue: publisher: taebah Khan email@example.com is changing Designer: Penelope graham firstname.lastname@example.org Contributors: Linda Belanger, scott Bergen, tim Bzowey, Doug conick, Bernice Dunsby, Jennifer hines, Jessica hume, Marjo Johne, Marcia Moffat, Jim Murphy, cathy Preston, Peter Wouters M Distributed within: ortgages ha- red. Roughly 40 percent to 50 per- gage; fixed or variable rate or a com- toronto star, september 2010 this section was created by Mediaplanet ve received cent of all Canadian mortgages are bination of both; prepayment pri- and did not involve the toronto star or its a lot of me- insured. Two years ago the federal vileges; portability privileges (ta- editorial Departments. dia attention government announced that insu- king your mortgage with you when lately. Stories red mortgages cannot have amor- you move). With the recent changes Mediaplanet’s business is to create new on consumer tization periods of longer than 35 and multi-features available it is im- customers for our advertisers by providing debt, chan- years and also require a minimum portant that a consumer have all the readers with high-quality content that motivates them to act. ges to mortgage insurance rules, down payment of five percent. For information available. Part of this interest rate decisions and the the first time, the government also is doing research on mortgages by Jim Murphy, AMp overall real estate market are only introduced a minimum credit score. president and ceO way of the internet,but also involves some of the issues. Mortgages are of This past spring the federal go- canadian Association of Accredited using the services of a mortgage pro- Mortgage professionals (cAAMp) great importance as they are vernment made further changes to fessional. the most important financial mortgage insurance rules including MY Best tIPs commitment a consumer will make a requirement that consumers qua- picking a mortgage seek a professional opionion in their lifetime. lify at the five year posted rate even Understanding each step of the The Accredited Mortgage Professi- though they may be taking out a va- mortgage process is key to ensur- onal designation (AMP) is the only Weathering the recession riable mortgage or a mortgage with ing the biggest investment of your national designation for mortgage PROtectIng YOUR Canada did not suffer the same a shorter term. Other changes inclu- life is the right one for you. There professionals. AMPs are required hOMe WIth LIFe mortgage problems that occur- ded limiting the amount of refinan- is no substitute for being prepared. to pass a qualifying course and to InsURance red in the U.S. We did not have cing on a property to 90 percent of Educate yourself and get the facts keep up to date on emerging indu- the same percentage of subprime the value and requiring a 20 percent you need to make the right mort- stry trends by taking annual con- Buying a new home can be mortgages, we did not have down payment on investment pro- gage decision and increase your tinuing education courses. Over- exciting, but keep in mind exotic mortgage products with rates perties. These changes were imple- home buying confidence. all, AMPs have been in the industry that it is a key life event that being reset higher after 18 months, mented to ensure that Canada main- longer and are more knowledgea- requires a thorough review and we also finance our mortga- tains a healthy mortgage market First steps ble about the market. When a con- of your personal financial ges differently. However, there and does not replicate the problems ■■Know your credit score sumer is sitting across the table fi- plan, including your insu- have been changes to the Canadian of the United States. ■■Save for a down payment nalizing their most important fi- rance needs. mortgage market in recent years. ■■Learn key mortgage termino- nancial commitment they should Chief among these changes are Choosing your features logy be confident that the individual is Imagine if something unexpec- the rules that govern mortgage in- Mortgage insurance is just one as- ■■Determine how much you can well versed in all the aspects of the ted - such as a serious illness or ac- surance. In Canada, when dealing pect to be aware of when taking out afford mortgage product they are recom- cident - happened to you or your with a financial institution and your a mortgage. A consumer must also ■■Get pre-qualified mending. For further information spouse. Without the right insu- down payment is 20 percent or lo- decide on a number of other featu- ■■Talk to a mortgage professional on where to find an AMP near you, rance coverage, your family may wer, mortgage insurance is requi- res such as: an open or closed mort- visit www.caamp.org. not be able to afford the costs asso- ciated with owning a home. “As a new homeowner, there is no better time to review your life insurance needs and protect your Housing trends in the Gta family’s financial future,” said Ca- thy Preston, vice president, Life and Health, RBC Insurance. “An insurance advisor can help you The greater Toronto Real of all transactions through the year. Western attraction determine what type of coverage estate market continues to Condominium apartments continue When it comes to location, Craw- is best for you to minimize the im- hum along at a steady pace. to occupy the second spot, accoun- ford says areas on the fringes of the pact of unfortunate events.” ting for about a quarter of real esta- downtown core continue to attract Despite a slow summer, 2010 is still te sales in the city, followed by semi- families because of their proximi- Here are some things to turning out to be a good year for real detached homes, condo townhouses ty to the city centre and easy access consider as you review your estate in the GTA, with total sales in and row townhouses. to transit. He cites central Etobicoke life insurance needs: the first seven months of the year up Stevie Crawford, a Toronto realtor between Jane and Bloor West to Kip- 12 percent compared to the same pe- with RE/MAX Condos Plus and mort- ling, as well as the western reaches ■■Could your family afford to keep riod in 2009, according to the Toron- gage agent with Argentum Mortgage of Queen and King streets. your home with only one income? to Real Estate Board. & Finance Corp, highlights a trend “As well, we cannot ignore the re- Overall, sales figures for the last he’s noticed with buyers who fall in- vitalization of River City east of the ■■Could your family pay the year show an eight percent increase to the Baby Boomer category. Don River,” says Crawford, who wri- mortgage and cover utilities from the previous year. “We are noticing an increase in tes a blog at torontorealestatetrends. and maintenance expenses? the amount of buyers within a cer- com.“We are seeing unparalleled go- What’s in demand? tain age and income demographic vernment mobility here and that’s ■■Could your family maintain So what types of properties are fa- opting for single-storey bungalows,” very encouraging.” their current lifestyle and pursue ring well in today’s market? The he observes. “Interestingly, most of BOunCIng BACK future aspirations? numbers show detached homes to these buyers previously occupied summer started off slow, but sales are up this year 12 percent from the caThY PresTon be the leader in housing sales, con- larger two-storey homes above 2,500 same period in 2009. Marjo johne vp, life and health, rbc insurance sistently accounting for almost half square feet.” email@example.com firstname.lastname@example.org A speciAl Advertising feAture by MediA plAnet septeMber 2010 · 3 news the ins and outs of term insurance As the name implies, term insur- mind that most term policies have Term insurance can be used to nancially dependent on their par- different types of insurance to pro- ance provides coverage for a specif- a set renewal period. At the end of cover a variety of insurance needs, ents. vide the financial security you want ic number of years, or “term”. Tradi- this period, you’ll need to “renew” such as a mortgage, personal or When considering a term poli- for yourself and your family. This is tional policies expire at the end of the policy at new rates. Since age is business loans or replacing an in- cy, make sure it can be converted to where an independent advisor can the term or when the insured per- a major factor in pricing insurance, come after a loved one dies. Its re- permanent coverage without hav- help in designing a comprehensive son reaches age 65 or 70. Today, you the cost will most likely increase. al benefit is in providing larger ing to prove you are still in good insurance program. can find term policies that will in- Look for a guaranteed renewable amounts of coverage at a lower cost. health. This convertibility feature sure you until age 100 and beyond. term insurance plan so that you are This can be especially important to can be extremely valuable if you de- PeTer WouTers The main advantage of purchas- guaranteed the right to renew your a family with small children where cide you want to keep your coverage director, tax and estate planning ing term insurance is the low ini- coverage even if your health has de- there is a need to provide financial after the term is up. and retail risk product Marketing tial premium or rate. But keep in teriorated. security while the children are fi- You may require a combination of empire life 4 · septeMber 2010 A speciAl Advertising feAture by MediA plAnet news TIp 2 KnOW THe TRenDs OF DOn’t MIss! YOuR FInAnCIAL sTAnDIng Buying a home? Know your aBC’s Buying a house is a heady prospect, whether you’re a first-time purchaser or a real estate veteran. But regardless of your expe- rience, it’s important to un- derstand the financial im- plications of home owner- ship. “The drive to own a home someti- mes overrules everything else and as a result buyers don’t look at the Fixed vs. variable: bigger financial picture,” says Ted Rechtshaffen, a certified financial planner who is president and CEO of TriDelta Financial in Toronto. Sometimes, homebuyers simp- which rate is right? ly don’t know enough to ask the right questions and review the re- levant factors.But it’s never too la- te to learn, Rechtshaffen says. As a starting point, prospective buyers should get a good grasp of how much they’ll need to save to shOWcase “flexibility can at of those surveyed indicated they’d have difficulty making their regu- avoid being burdened by a large mortgage. In addition to the down ■■Question: Are you caught least be as lar mortgage payment within three payment, there are other first- between the cost certainty of a ﬁxed rate mortgage and a important as rate.” months if the primary income ear- ner lost their job. year expenses such as land trans- fer taxes, renovations, moving variable rage? costs and furniture. ■■Answer: evaluate the trends The future of banking in your ﬁnancial circumstances Increasingly, Canadians are reali- Which rate? before you decide. Doug Conick zing that they can no longer look Knowing how interest rates work president and ceO, Manulife bank of at their mortgage in isolation. In- will also help home buyers decide Historically, most Canadian ho- canada stead, they’re looking for more in- whether they should sign up for a meowners were happy to pay a ners whose financial circumstan- made any extra mortgage pay- tegrated banking products that al- fixed-rate or variable mortgage, or slightly higher rate in exchange for ces change, for better or worse. ments in the past year; however, low them to quickly and comfor- a combination of both. the cost-certainty associated with a Flexibility can be at least as im- nearly half indicated they’d be ve- tably adapt to changing financial Financial literacy should inclu- fixed rate mortgage. More recently, portant as rate. ry likely to do so if they were able circumstances. de understanding the legal impli- some Canadians have shifted to va- Most homeowners experience to easily access that money again A new generation of “all-in- cations of home ownership, says riable rate mortgages, partially in re- fluctuations in income and expen- if their needs changed. They pas- one” banking products, pro- Ray Leclair, a real estate lawyer sponse to research showing that va- ses not only from year to year, but sed up the opportunity to reduce vide this flexibility by giving and vice-president of the Title- riable rate mortgages often cost less from month to month. their debt–not because they didn’t homeowners the ability to: PLUS program at Lawyers’ Profes- over the long term. A recent survey of Canadian ho- have the money–but because their sional Indemnity Company in To- meowners found that, while most mortgages lacked the flexibility ■■Adjust their payments as their ronto. Different, but the same consider being debt-free a high fi- they desired. needs change, as long as they re- “People don’t realize that the Despite their differences, most nancial priority, almost half fai- Traditional fixed and variable ra- main within their borrowing li- title to their home can be sto- traditional fixed and variable-ra- led to reduce their debt at all in the te mortgages can also quickly put mit len,” says Leclair, whose compa- te mortgages share three key preceding 12 months. homeowners in a precarious po- ■■Repay their variable-rate debt ny sells title insurance to protect similarities: Digging deeper, almost two- sition if their finances take a turn as quickly as they want, without homeowners against this risk. thirds indicated that they hadn’t for the worse. Forty three percent penalty “That’s why it’s important to have ■■They require regular, inflexible ■■Re-borrow any money they’ve an in-depth discussion with a real Facts payments already used to repay their debt, estate lawyer. ■■They charge penalties for repay- ■■ 69% of homeowners consider being permanently lose access to that money up to their borrowing limit ing the debt too quickly debt-free among their highest ﬁnancial ■■ 43% would have difﬁculty making ■■Divide their debt between va- Marjo johne ■■Once a payment has been made, priorities their regular mortgage payment with- riable and fixed interest rates email@example.com that money cannot be easily re-bor- ■■ 46% have as much or more debt than in three months if the primary income rowed they did a year ago earner lost their job In a world of ever-changing finan- paying off your ■■ 64% failed to make any extra mort- In other words, traditional fixed gage payments in the past 12 months ■■ Source: Manulife Bank survey of 1,000 Canadian homeowners, con- cial circumstances, the question for homeowners is no longer “fix- mortgage and variable-rate mortgages pro- ■■ 46% would be very likely to make ex- ducted by Research House July/August ed vs. variable” but “flexible vs. in- vide little flexibility for homeow- tra mortgage payments if they didn’t 2010. flexible”. There are ways you can reduce the length of your mortgage, it will al- so help you in minimizing cost of borrowing. ■■Increase your frequency of pay- Buying your first home: down payment ment: it will save you hundreds of dollars in annual interest costs. ■■Prepayments and anniversary options and pre-approvals payments: Mortgage providers al- low you to make up to 20% of the entire mortgage once a year. Tax refunds or annual bonus help with This also allows you to lock in your west carrying costs because they include the insurance premium. these payments. QUestIOns & ansWeRs interest rate with a 90 day guarantee do not have to be insured against ■■ Make lump sum payments. which is a great feature in a rising default. So while it may take long- using Your RRsp as a Down ■■ Whenever possible double your As a first-time home buyer, you pro- interest rate period. er to accumulate this type of down payment payments bably have many questions, in- Homebuyers will generally need payment, it will also save on mort- Under the federal government’s Ho- ■■Shorten length of time to repay cluding the right down payment to have an appraisal of the property gage costs over the long run. me Buyer’s Plan,first-time home buy- your loan: Ask your mortgage pro- amount and whether you’ll be they are purchasing in order to ob- ers are eligible to use up to $25,000 in vider to show you how you can se- approved for a mortgage. tain a firm approval of their purcha- Low Down payment Insured RRSP savings per person ($50,000 for lect 20 years amortization period One of the first steps in buying se. Mortgage couples) for a down payment on a ho- instead of 25 years. your home is obtaining a pre-appro- When it comes to deciding on the Most lenders now offer insured me. The withdrawal is not taxable as ■■If interest rates have dropped ved mortgage.A preapproval will de- right down payment amount, there mortgages for both new and re- long as you repay it within a 15-year when you renegotiate your next monstrate to sellers and real estate are a number of options to consider: sale homes with lower down pay- period.To qualify, the RRSP funds you term, keep your mortgage pay- agents that you are a serious buyer, ment requirements than conven- plan to use must have been in your RR- ments the same. More money will which can help in your negotiations. Conventional Mortgage tional mortgages-as low as 5%. Low SP for at least 90 days. go directly to paying down the Another advantage of having a A conventional mortgage requi- down payment mortgages must be principal. preapproval is that you will know res a down payment of at least 20% insured to cover potential default how much you can realistically af- and is offered on both a fixed or va- of payment; as a result, their car- Bernice DunsBY ford and what your payments will be riable interest rate mortgage. Con- rying costs are higher than a con- director, Home financing, rbc TaeBah Khan before you start looking at homes. ventional mortgages have the lo- ventional mortgage because they firstname.lastname@example.org email@example.com A speciAl Advertising feAture by MediA plAnet septeMber 2010 · 5 news DOn’t MIss! ensure your home insurance is updated According to a recent RBC In- tal value of all of their contents for they have the right amount of co- pes of losses, such as theft, not for These types of additions can be surance / Ipsos Reid survey, any type of loss, but there can be verage.” unexplained losses such as the di- purchased at any time and usu- only 38 per cent of those Ca- limits,” said Francois Boulanger, For example, an average ho- amond falling out of a ring. ally do not require a deductible nadians who bought or acqu- president and CEO of RBC Gene- me insurance policy provides up To ensure valuable jewelry is amount to be paid. ired something of value, such ral Insurance Company. “It’s im- to $5,000 in coverage for jewelry; fully insured, policy holders can as jewelry, updated their ho- portant for Canadians to regularly however, a diamond ring alone purchase additional coverage, me insurance coverage. assess their belongings, including can easily exceed that amount. In known as a “rider”, on individu- TiM BZoWeY “Most people assume their home jewelry, and then check with their fact, that same policy may only co- al items to recover the full repla- vp, property and casualty, rbc insurance insurance policy will cover the to- insurance advisor to determine if ver the replacement of certain ty- cement cost, for any type of loss. firstname.lastname@example.org 6 · septeMber 2010 A speciAl Advertising feAture by MediA plAnet news Is refinancing a Facts ! good idea? Question: Are you ready for a big purchase, but unsure how Make the to allocate your funds? grade with Answer: Crunch your numbers first to determine your your credit payment strategy. score Want to improve your with another bank,” says Meaghan ge,” she says. “If you’re only going to you pay on your mortgage.” credit score? Here are some Maybe you’re in the market Hutchings, a Toronto-based mortga- be saving a little,then maybe it’s bet- Whatever your reason for wan- steps to take you in the right for a new car or finally ready to redo your tired-looking kit- ge agent with The Mortgage Coach, ter to just be aggressive about pay- ting to refinance your mortgage, the direction: chen. Or perhaps you want to part of the Invis network of mortga- ing off your credit card debt.” experts say it’s a good idea to talk to take everything you owe and ge brokers. “So you have to consider Given today’s relatively low inte- your banker or mortgage professio- ■■ Get the picture. To ensure credi- combine them into a single all the costs–including the penalty rest rates, many Canadian with fix- nal before making a final decision. tors have accurate information about debt. Is it a good idea to refi- amount, your existing mortgage ra- ed-rate mortgages are also looking “The bottom line result for this you, get a copy of your credit report nance your mortgage to pay te, appraisal fees and lawyer fees– at moving their mortgage to another decision should be for you to better through Equifax Canada (www.equi- for these expenses? and figure out if the cost savings bank as a way of reducing their hou- off in the short and long term,” says fax.ca) or TransUnion (www.tran- from a lower interest rate will actu- sing costs. CIBC is responding to this Hutchings at The Mortgage Coach. sunion.ca). Next to cash, breaking your existing ally offset these costs.” increasingly popular refinancing “If the savings on lower interest ra- mortgage and then taking out a big- While refinancing your mortga- strategy with its Mortgage Switch tes are not going to outweigh the ■■ Stay below your limit. Avoid go- ger one is generally the cheapest way ge to consolidate multiple high-in- offer, which gives customers cash penalty and other related costs, then ing over your credit card limits, since to finance big expenditures, say the terest is a good strategy, it requires back on their new CIBC mortgage. it makes no sense to refinance.” higher balances have a negative im- mortgage and money experts. Mort- commitment and discipline, says The cash, which is paid out up- Hutching adds that even if you’re pact on credit scores. gages tend to have lower interest ra- Anjel Van Damme, director, home front, helps mitigate any prepay- not actively considering refinancing, tes than credit cards, bank loans and equity financing products at RBC. ment charges of breakage costs that it’s a good idea to talk to your mortgage ■■ Pay your bills regularly and on credit lines. And payments can be “It’s important to be disciplined may be charged by the current len- professional at least once a year to re- time. At least cover the minimum spread out over a longer period. about not racking up debt again and der. view your mortgage and see if it is still monthly payments. But before rushing out to speak to be committed to paying it down,” “Our message is that you don’t the best option for you. to your bank or mortgage broker, it’s she says. need to wait until your mortgage is “Think of it as an annual checkup to ■■ Go easy on those credit applica- important to crunch the numbers For those with only a few thou- up for renewal to get advice about make sure you’re still in the best mort- tions. Every refusal shows negatively and know all the facts, say the ex- sand dollars in debt, consolidation your options,” says Colette Delaney, gage situation possible,” she says. on your credit score, so avoid apply- perts. may not be the best route to take, senior vice president,mortgages and ing for every zero-interest credit card “Many financial institutions char- says Van Damme. lending at CIBC. “You can talk to an offer. ge a penalty for breaking a mortga- “Sometimes there are costs to refi- advisor today to review options that Marjo johne ge, particularly if you’re refinancing nancing or adding on to the mortga- could help you reduce the interest email@example.com Marjo johne firstname.lastname@example.org Discover how easy it is to build a home for a family in need. MCAP, one of Canada’s leading mortgage companies, is making it easy for you to build a brighter future for a Canadian family with its Key to Hope Program. Simply by adding a monthly donation to your mortgage payment, you will be helping to build a much-needed home while going about your daily business. MCAP will match* your donation, with all proceeds going to Habitat for Humanity Canada. Ask a mortgage broker about the MCAP Key to Hope Program. Visit keytohope.ca for your chance to win 1 of 3 iPad™ computers. *MCAP’s commitment is to match, dollar for dollar, all donations made by consumers, brokers and MCAP employees. MCAP may restrict the total matching in the future. MCAP Service Corporation. Ontario Mortgage Brokerage #10515 Ontario Mortgage Administrator #11692 ™iPad is a registered trademark of Apple Inc. Apple is not a sponsor of, nor a participant in this promotion. A speciAl Advertising feAture by MediA plAnet septeMber 2010 · 7 news 4 a line of credit provides ﬂexible funding DOn’t MIss! Over the past two decades, source of financing for big ticket ex- but can be accessed multiple times. segments. Trust, also offer credit lines that can lines of credit have emerged penses such as a home renovation or Another advantage to having a line “So you could set up a segment for be split up so that a portion is paid as the preferred form of con- sumer credit amongst Cana- furniture purchases. Credit lines ty- of credit? Unlike a mortgage, a line your mortgage, another segment according to a set schedule with set dians, eclipsing credit cards pically come with higher borrowing of credit can be paid off without in- for the purchase of a car, another for amounts, just like a bank loan but at and bank loans in popularity. limits and lower interest rates than curring penalties. investments and another for your the interest rate of a credit line. Today, credit lines account credit cards. Tying a line of credit to As they’ve grown in popularity, li- child’s education,” explains Anjel for about 60 percent of over- your home’s equity can further re- nes of credit have also evolved to of- Van Damme, director, Home Equity all consumer credit issued duce your rate and give you the op- fer consumers more options and be- Financing Products at RBC. “Some by the country’s chartered tion of paying only the interest nefits. For example, RBC Royal Bank people find this convenient for tax banks. when cash flow is tight. offers a Homeline plan, essentially a purposes, plus it makes it easier to For homeowners,a line of credit pro- Unlike a bank loan, a line of credit home equity credit line, which can track expenses.” Marjo johne vides access to a convenient,flexible requires only a one-time application be set up in as many as five different Some banks, such as TD Canada email@example.com 8 · septeMber 2010 A speciAl Advertising feAture by MediA plAnet InspIratIon Question: Did you know 1.3 million Canadians must choose between paying their rent or for their life’s necessities? Answer: Habitat For Humanity is helping these families in need by engaging Canadians in the fight for aﬀordable housing. MCap gives families the key to hope hOW We DID It ment which MCAP will then match and PROFILe nity. 2000. In that time, the organiza- donate to Habitat for Humanity Canada. ”With 1.3 million Canadian fa- tion has generated over $1.9 mil- ”MCAP firmly believes in the work of Ha- MCAp milies having to choose between lion in charitable donations. The Most Canadians dream of ho- bitat for Humanity Canada, and we are al- paying their rent or paying for goal of Key to Hope is to raise at meownership. unfortunately for ways looking for new ways to engage our ■■ MCAp is one life’s other necessities, Habitat for least an additional $1 million for many, that’s all it will ever remain. employees and customers in the cause,” of Canada’s larg- Humanity Canada is always loo- Habitat over the next five years so MCAP, one of Canada’s leading indepen- says Ron Swift, President of MCAP. ”By al- est independent king for new ways to engage Ca- that even more families will expe- dent mortgage companies, is working to lowing our customers to donate to Habitat mortgage com- nadians in the fight for decent, af- rience the benefits of owning a de- change that via a unique partnership with through their mortgage payments, we are panies, spanning fordable housing,” says Stewart cent and affordable home which Habitat for Humanity Canada that taps in- providing them with a simple and effecti- from Vancouver Hardacre, President and COO of include improved health and a to the mindset of today’s “Generation G” ve way to support Habitat.” to Halifax Habitat for Humanity Canada. ”By stronger connection to the com- consumer. The “G” stands for “generosity” ■■ HFH Canada is allowing Canadians to add on any munity. as more and more Canadians are looking Donating advice and time a national, non- donation amount to their mortga- By making it so easy for home- for ways to make a positive difference in People traditionally look to mortgage profit organi- ge payments, Key to Hope allows buyers to participate in the pro- the lives of others. brokers for advice and to help them un- zation promot- homeowners to share the joy of gram, this goal should easily beco- The Key to Hope Program provides ho- derstand their choices in order to make ing affordable homeownership with fellow Ca- me a reality. mebuyers with an easy and convenient the best decisions when it comes to ho- homeownership nadians in need.” way to help build a home for a family in meownership. The option to participa- as a way to break need. The first of its kind, this program al- te in this program is yet another service the cycle of A decade of aid lows borrowers to simply add a specified mortgage brokers can offer to consume- poverty. MCAP has been a partner of Ha- Marjo johne donation amount to each mortgage pay- rs, one that benefits the larger commu- bitat for Humanity Canada since firstname.lastname@example.org A speciAl Advertising feAture by MediA plAnet septeMber 2010 · 9 HOusIng HOpe The nguyens are just one of the 1800 families HFH has helped since 1985. Photo: habitat for humanity change Question: Thinking about taking the plunge and buying, but City dwelling gaining popularity wary of impeing mortgage responsibilities? The debate between downtown Answer: If you’re looking for a long-term living situation, buy- dwelling and the suburban lifest- yle is a polarizing issue, and a To- ing may be best. ronto real estate broker says she is seeing commuting woes dissu- ading potential homebuyers from purchasing in low density areas. renting or owning: Deirdre Kutasi, who works at Coldwell Banker Terrequity Real- ty, says 98 percent of her business comes from people seeking down- town homes. Even though the ci- ty is more expensive, she says she which is best? is seeing more people opting for gritty downtown than spacious li- ving in Toronto’s outer areas. Big homes, big lots, big commutes The appeal of suburban lifestyle To those in the housing mar- gage and the property usually ap- achieved by owning over a long pe- the homeowner pays for that. They is obvious–large homes on large ket unable to decide between preciates over time,” she explains. riod of time. For those not expecting also have to pay property taxes or lots, plenty of parking and priva- buying or renting, a Toronto “When you rent, you’re paying so- to stay in one place longer than a few condo fees,” she says. “Renters cy from the neighbours.Many pe- real estate broker has some meone else’s mortgage.” years, Duong says renting likely ma- pay first and last month’s rent up ople who work and run busines- firm advice: Buy the home. Duong says choosing to purcha- kes more financial sense. front, maybe a security deposit or ses from home prefer the space se a home should depend on seve- One of the worst mistakes buy- a maintenance fee and then rent suburban living affords them,Ku- In reality the decision to rent or buy ral factors, of which the market ers can make is to be ill-equipped every month. And if something tasi explains. is not so simple, admits Joanna Du- isn’t of paramount importance. to handle unexpected but inevita- breaks, they can call the landlord.” But with that space comes dis- ong, who works at Coldwell Ban- “The market changes. Your per- ble costs. In addition to the down- Dollar for dollar, homeowners’ tance and the task of driving ker Terrequity Realty. It has been sonal situation matters more,” payment–usually a minimum fi- costs outweigh those of renters– which deters many from purcha- shown that people who invest in ho- she says. “You need to ask yourself ve percent–and moving costs, the initially, annually and over time. sing homes outside the down- me ownership over long periods of whether you are financially prepa- buyer has at least two months of “But all that goes towards town core. time accumulate more wealth than red and psychologically, whether mortgage payments saved in or- equity. It’s security and it’s an “The main reason people don’t those who rent over the same time. you’re ready for the commitment.” der to be what Duong considers “fi- investment.” want to live in the suburbs is the “When you purchase a ho- nancially prepared.” commute,” Kutasi says. Now with me, this is something that is go- Benefits of buying best when “Homeowners pay for all main- current construction projects,she ing towards savings. You make a owning over time tenance, all electrical, utilities out jessica huMe says the drive is even worse. But down payment, you pay the mort- The benefits of home ownership are of pocket. All renovations, a leak; email@example.com the cost of suburban living for those who work downtown goes beyond time spent commuting, Design your dream she says. Vehicle payments, insu- rance and gas costs add up. “People understand that living downtown you save that hour home on the cheap commute.” Besides, what city folk lose in space they make up for in cultu- re, restaurants and variety, Kutasi says. “There’s more to do downtown– Canadians have a high pro- For those wanting to redesign on a of more space, if placed well. size matters, but neither lar- more arts, more culture. Neigh- pensity for living in homes budget, three things to remember ge nor small is better bourhoods are closer and you ac- they don’t love as much as are paint, art and fabric. Think beyond the big box Dispelling any delusions that de- tually get to know your neigh- they could, a Toronto interior Painting–from one wall to all store signing for small spaces is more bour.” designer says. walls and even floors–can change Changing small appliances such difficult than large, Schnitter ex- Because downtown property Even if ideas for change are enter- the feel of any space with as dra- as lights and lamps can be done ea- plains that less spaces can result is limited, the investments gene- tained, following through with the matic or subtle an effect as desired. sily and cheaply by staying on top in better design: having a limited rally have greater returns as the project can seem an overwhelming Further savings can be achieved by of auctions, flea markets, street sa- area “forces you to think more spe- resale values increase, along with and sometimes expensive endea- doing the labour oneself. les and online opportunities. That cifically.” demand.That said,the land trans- vour says Jeff Schnitter, partner at Art work can contribute a sense said, Schnitter advises to hold off on Perhaps mostly importantly, fer tax, imposed in 2007 by Mayor Seven Haus Designs. of authenticity and style. Depen- the purchasing of smaller items for Schnitter urges that we stray from David Miller, means city dwellers “People will live in a place for fi- ding on size, colour and mood, stra- a room until the main components our design-comfort zones. pay a fee of one- to two-percent of ve, 10 years and they’re never hap- tegically placed art can enrich the of the redesign are completed. Pro- “People can fall into patterns the purchasing price on top of all py with it,” Schnitter says, explain- space or be a focal point. blems, he says, can arise when inspi- and it can be difficult to break out other closing costs. ing that regardless of the space be- Rather than buying new furni- ration for redecoration comes from of them,” he says, adding that ex- Like many others choosing to ing considered for redesign, some ture, existing items can be updated one object. posing oneself to a multitude of live inner city, Kutasi moved from basic questions need to be answe- or completely made over simply. Rather than using specific and po- styles and options can be a good Mississauga to her High Park area red first. “We’re figuring out how Replacing new fabric on couches tentially arcane items–art works, a way of breaking from tradition. home recently and says the mobi- to best use a space, so you need to and chairs with new upholstery piece of furniture or clothing–as the “Trust me, it’s a lot more fun if lity the location offered was key. know what that space is, what you can save money and create a diffe- inspiration for the look of the room, you go beyond what you originally “I live a five-minute walk from want to do there, what you like. You rent aesthetic. Schnitter suggests taking a broader thought was possible.” the subway. In the suburbs you need to understand the opportuni- In addition to reupholstering, approach and developing a big pic- have to drive everywhere.” ties in any given space as well as painting old furniture or removing ture vision for the space. the challenges it presents.” paint can bring pieces back to life. “First figure out what you’re going Mirrors can open up a room, pro- to do with the space, then arrange jessica huMe jessica huMe Designing on a budget viding more light and the illusion the room.Add the details in layers.” firstname.lastname@example.org email@example.com 10 · septeMber 2010 A speciAl Advertising feAture by MediA plAnet news TIp 3 YOu DOn’T neeD TO Be In pOOR FInAn- eVent aLeRt CIAL sTAnDIng TO seeK ADVICe tweens achieve “celebrity status” by giving back Mortgage brokers dish out advice Celebrities make headli- ■■Holding a door open for so- nes daily for their philan- meone thropic work urging oth- ■■Recycling ers to get involved and do ■■Baking cookies and bringing Banks often come to mind counted for only 33 percent of real has more than 1,700 mortgage pro- their part. The tween gene- them to a local firehall or police right away when people think estate financing in Canada. fessionals across Canada, also have ration is a segment that is station about mortgages. proprietary low interest rate product easily inspired by famous But these days, a growing number of what are the benefits of lines negotiated exclusively with people. Tween role models A chance to win, a way to Canadians are looking beyond them using a mortgage broker? the various lending institutions. such as Justin Bieber and help and turning to mortgage brokers for Respondents to the latest CMHC Miley Cyrus are no excep- Another way is to enter a contest help in financing their home or refi- survey said mortgage brokers saved Debunking misconceptions tion when it comes to hel- that helps make a difference. For nancing an existing mortgage. them time and helped them get the But despite the growing popularity of ping their communities and example, from October 4th to No- “What a mortgage broker does es- best deal on their mortgage. About mortgage brokers, a few misconcep- giving back. Although busy vember 12th, Genworth Financial sentially is shop the market for the 80 percent of respondents also said tions persist, Rawson says. One falla- with their careers, these Canada and Habitat for Humani- best rates on behalf of their client,” the broker they dealt with took the cy is the belief that mortgage brokers young stars still make time ty are offering students in grade explains Jim Rawson, regional ma- time to fully understand their finan- deal only with people who have low to volunteer and support four, five and six the opportuni- nager for Invis, a mortgage broker- cial situation and mortgage needs. incomes or tarnished credit histories. charities. ty to share their thoughts about age with more than 800 consultants “The broker is really working for Then there are the people who “what they love most about their across Canada. “We’re just like an your benefit,” Rawson explains. think using a mortgage broker will re- Tweens–children aged 9-12–are home”. By entering the Meaning insurance broker, except we deal in “And unlike the person at the bank sult in additional fees. In fact, Rawson often unaware of the opportuni- of Home Contest, students ha- mortgages.” who may also deal with other pro- says, banks and other lending institu- ties available to them and how ve the chance to help funds go From being fringe players in past ducts such as RRSPs and GICs, the tions pay mortgage brokers a finder’s easy it is to volunteer and get in- towards the building of a home decades, mortgage brokers today mortgage broker is really a specialist fee for sending business their way. volved in charitable work. Pa- for someone deserving in their have established themselves as im- in only one field–we live and breathe “You as a consumer don’t need to rents can help their kids get in- community. They will also en- portant resource for real estate con- mortgages, it’s what we do all day pay your mortgage broker a fee,” he volved by finding them initiati- joy ‘celebrity status’ by hosting a sumers. Close to 40 percent of all long.” says. ves that they can participate in. A pizza party for their entire school. home purchases and refinanced Rawson is quick to point out that For homebuyers who aren’t sure good start for tweens could be vo- Encourage your kids to enter the mortgages in the past year were do- mortgage brokers work with banks whether to deal with a bank or mort- lunteering at a local community contest by logging on to www. ne through a mortgage broker, ac- as partners. But whereas banks sell gage broker,Rawson offers this advice: centre or food bank, taking part meaningofhome.ca and having cording to survey results released only their own products, mortga- have a talk with both parties. in a park clean up or playing with them write about what they love this year by the Canada Mortgage ge brokers have access to the vari- “Sit down with both and ask them pets at a local animal shelter.Oth- most about their home. and Housing Corporation, a govern- ous institutions that lend money the questions you need answered,” he er ideas include: Volunteering is a great way for ment-owned agency that provides for mortgages, including banks, cre- says.“It’s an important decision so you kids to learn that helping others mortgage loan insurance, mortga- dit unions,trust companies,pension need to take the time to make sure you ■■Helping to cook or serve a meal can make you feel like a star. ge-backed securities, housing po- funds, insurance companies, finan- have all the facts.” at a homeless shelter licy and programs, and housing re- ce companies and even individual ■■Adopting a senior citizen search. lenders. “grandfriend” and writing him or LinDa BeLanGer By comparison, the CMHC’s 2006 Some mortgage brokers, such as Marjo johne her letters and visiting community leader, genworth financial survey found mortgage brokers ac- Dominion Lending Centres, which firstname.lastname@example.org email@example.com A speciAl Advertising feAture by MediA plAnet septeMber 2010 · 11 paneL oF eXperts scott Bergen Marcia Moffat Jim Murphy, AMp Director of Marketing and Vice President ceO and President, Product Development home equity Financing, RBc caaMP Manulife Bank of canada Question 1: There are certain cases where a When applying for a mortgage to Yes, there are mortgages designed homeowner with limited income can purchase a home or refinance a current for borrowers like the self employed and Can one qualify for a mortgage qualify for a mortgage. For example, home, there is generally a requirement new Canadians. However lenders do if they are unable to conﬁrm small business owners often reinvest for the lender to confirm annual income not want to take on unreasonable risks their income? much of their income back into their bu- to ensure the mortgage is affordable. Ho- so they look to factors other than in- siness and may have little income to dec- wever, programs that have been develo- come confirmation as evidence of the lare at tax-time. However,if the business ped to assist homebuyers who may not borrower’s capacity to make payments. is established and the client has a good be able to meet these qualifications or do For example, they may require evidence credit rating, they could qualify. not have the ability to provide income that the borrower has a good credit sco- Another example is retirees who have confirmation. For example, homebuy- re and can manage credit well, or requi- significant assets but limited income. ers that are new to Canada and may not re evidence that the borrower has signi- Again, with a good credit history, they have history here may qualify, as well ficant net worth. Lenders also typically could qualify for a mortgage. as the newly self-employed, and home require a larger down payment. buyers who have put a significant down payment toward their purcahse or equity in their homes. Question 2: This can help because borrowers are Most people think of a mortgage pay- The key to saving money is to switch making a couple of extra payments each ment as a monthly payment – however if to accelerated bi-weekly payments. If Does paying a mortgage year. An even more effective strategy is you take that monthly payment and split a person had a monthly mortgage pay- bi-weekly really save money or to take full advantage of prepayment pri- it into a bi-weekly accelerated payment, ment of $1000 they make payments of reduce amortization? vileges, which most types of mortgages you will be paying your mortgage off fas- $12,000 over a year. If they switched to allow. Some people hesitate to make ex- ter – the equivalent of 12 months in 24 pay- non- accelerated bi-weekly they would tra payments because they don’t want to ments, giving you the opportunity to pay pay $461.54 every two weeks or $12,000. lose access to that money in case their off your principal faster. For example, if However if they switch to accelerated bi- needs change. However more flexible you have a $100, 000 mortgage. And your weekly,they pay $500 every two weeks or mortgages, such as Manulife One, allow interest rate is five percent, your mortga- 26 payments per year or a total $13,000 clients to re-borrow that money if their ge payment would be $581.61. Changing to over a year. It is the increased total year- needs change in the future. a bi-weekly accelerated payement equates ly payment that reduces amortization. to $290.81 every two weeks and saves you over $12,500 in interest costs during the life of your mortgage, cutting down your amortization period from 25 years to just over 21 years. Question 3: The primary differnence between With a fixed rate mortgage,your interest Fixed interest mortgages have the fixed-rate and variable-rate mortgages rate and payment will not increase during rate set at the beginning of the term. So a Fixed vs. variable, what’s the is whether or not the rate is locked in. the term you have selected.But remember, five year mortgage may have the rate set di erence? With fixed rate mortgages, clients ty- you won’t be able to take advantage of any at 3.99% and it remains constant over the pically pay a slightly higher rate in ex- decline in rates that may occur until the five years. Variable rate mortgages have change for payment stability. With vari- end of your fixed rate term. rates that can change up or down over able rate mortgages, clients typically pay A variable rate mortgage fluctuates with time because the rate is tied to a bench- a slightly lower initial rate but the in- the prime rate.The advantage of a variab- mark rate that can fluctuate. Many vari- terest rate and required payments may le rate is that it is usually one of the lowest able rate mortgages allow the borrower fluctuate up or down. mortgage rates offered–meaning you may to convert to fixed rate if they fear rates A third option is an “all-in-one” account save money now. Keep in mind that if pri- are about to rise. that allows clients to combine fixed and me rate rises,your mortgage payment may variable rates and offers some flexibili- not change, but your interest rate will rise, ty for clients to adjust their payments as possibly increase your interest costs over their needs change. the life of your mortgage and lengthen the amortization of your mortgage.