How to Boost Affordability When Acquiring a Mortgage

The key to a successful mortgage experience is carefully considering all your options and buying within your means so that you can sustain your payments. Borrowers unsure of which approach is best can fall back on certain time-tested strategies for ensuring they don’t overextend themselves.

Here are a few tips to boost affordability when arranging your mortgage:

1. Know what you can afford. 
A mortgage pre-approval helps you establish a price range and the maximum mortgage you can reasonably afford.  Most lenders will lock in a rate for up to 120 days when pre-approving potential borrowers for a mortgage.

2. Revisit your current debts. 
When applying for a mortgage, a lender will look at your total debt service ratio (TDS), or how much of your total income is going towards various types of debts, including car loans, credit cards, and other consumer loans.  A mortgage broker can advise on restructuring your current debt (by increasing the amortization and lowering payments on your car loan, for example), to ensure that your TDS ratio is acceptable to prospective lenders.

3. Look into a longer amortization. 
Some lenders offer mortgages with amortizations longer than the traditional 25-year amortization which results in a lower monthly payment.  Those opting for a longer amortization should plan to make lump sum payments down the road or increase their monthly payments (say, after receiving a salary increase), to lessen the amount of interest they pay throughout the life of their mortgage.

4. Increase the size of your down payment. 
Increasing the size of your down payment means a lower monthly payment.  A common way for first-time buyers to come up with more cash for a down payment is to make use of the federal Home Buyers' Plan to withdraw up to $20,000 each from a registered retirement savings plan (RRSP) without tax penalty to buy or build a qualifying home.  Also, many lenders allow the down payment to come from a properly documented gift, and a borrowed down payment may be possible for some borrowers.

5. Consider locking in your rate for a longer period of time.
If you’re uneasy about fluctuating interest rates and your ability to meet any increases, then a fixed-rate mortgage could be a good fit.  Many lenders are open to longer fixed terms, up to 10 years in some cases.

Preventing Household Accidents

Having children in your home can be a fun and exciting experience. Unlike adults, children need to rely on you to provide them with a safe environment.

Household injuries are one of the top reasons kids under age 3 visit the emergency room, and nearly 70% of children who die from unintentional injuries at home are 4 years old and under. Younger children have the highest risk of being injured at home because that's where they spend most of their time.

Supervision is the best way to prevent injuries, in the home and outside, but even the most watchful parents can't keep kids completely out of harm's way every second of the day.

Fortunately, many of these incidents can be easily prevented if parents follow these accident prevention tips:

Living room
Store away any small objects like coins, small toys, souvenirs that a child may swallow.

Use a cordless phone to make it easier for you to continuously watch young children.

Children like to mimic adults. It is very important that you carefully watch your actions in front of children. Never let your children see you take medication and store bottles well out of reach. You should also not smoke in front of your children. They may try to play “grown-up” by taking your medication or playing with a lighter.

Use corner and edge bumpers to help prevent injuries from falls against sharp edges of furniture and fireplaces. Use door stops and door holders to help prevent injuries to fingers and hands.

Use safety gates to help keep children away from stairs or rooms that may be dangerous. Look for safety gates that children cannot dislodge easily, but that adults can open and close without difficulty.

Use lead-free low-emission water-based paint in all living areas in the home.
Install a carpet in all rooms to soften the impact of your children's tumble and stumble.

Kitchen
Never put inedible products in food or drink containers. Children may not be able to read the label and could put something dangerous in their mouth.

Keep sharp objects such as scissors and knives out of reach. Make sure that drawers have stops to prevent them from being fully pulled out.

Cook on the rear stove elements to prevent children from reaching up and burning their hands.

Store cleaners, disinfectants, bleach, and other chemical agents in a locked cupboard or on a high shelf.

Bathroom
Never leave children unsupervised in the bath. Put non-slip stickers on the bottom of the bathtub.

Consider installing shower and bath rails as they are a very good safety measure for the whole family.

Use outlet covers to help prevent electrocution. Be sure the outlet protectors cannot be easily removed by children and are large enough so that children cannot choke on them.

Fire hazards
Keep candles, matches, and cigarette lighters away from children’s reach. Install a smoke detector on every level of your home and near bedrooms to alert you of fires.

Install a Carbon Monoxide detector outside bedrooms to help prevent CO poisoning. Keep a fire extinguisher handy in the kitchen, near the fireplace, and on the bedrooms level, and make sure you know how to use them in case of an emergency. It may save someone's life in a crucial moment.

What is childhood without the ability to explore? It is natural for children to explore their world with all their senses. However, this can mean they will also venture to dangerous areas in the home.

Although many people usually think of babies and toddlers when they hear the word "childproofing", however, unintentional injury is the leading cause of death in kids 14 years old and under. Young kids have the highest risk of being injured at home because that is where they spend most of their time so why not take all measures to ensure their safety.

By following the steps above you will be taking the first step to protecting your loved ones to ensure they have a safe environment in your home.

How to Invest Successfully in Canadian Real Estate

The Canadian real estate market makes an attractive place to invest in because of its geographic location and general stability of the economy. Experts say the secret to successful real estate investing in Canada is research. Get good advice and look for clues in sources such as the new Canadian census data. The pay-off is two-fold: ongoing cash flow and capital appreciation.

Here are a few tips you need to consider when searching for investment property in Canada.

1. Don’t be tempted to over-stretch yourself, financially speaking. Think carefully about whether any potential perceived benefits from investing in property, in general, outweigh the risks associated with buying an expensive, slow to liquidate investment asset. And only if you are sure they do should you begin to research the Canadian property market for a profitable entry point.

2. Determine whether you are looking to work your investment quickly and turn it into a capital gain by buying low and selling high or whether you’re interested in realizing a regular income from the rental of a property for the long term. Your investment approach should guide your buying decisions. Simply identify what you really want from the property. "Do you want to make a quick $30,000 in a very short period of time or would you be happy with earning $800 to $1,000 a month for the rest of your life?"

3. Determine a geographic location to invest in Canadian property based on what you want to buy. Use a nationally-based Realtor in Canada with experience in your specific area. Ignore national statistics, and focus on the numbers and trends that directly affect your market. Check if population growth, average income, and job creation are faster than the provincial average. Never base your long-term investment decisions on something as risky as the fact that a town is currently popular because a new company has recently opened there or a significant change has come about to positively affect the economy of the location.

4. Is the area's affordability index in the hot zone? You don't want the property to be too expensive or too cheap because if it is too cheap, renters will become buyers and if it is too expensive, the property values may stall.

5. Is the location forward looking? Is it up and coming or is it dying? Is money being invested into things such as transport links, communication, and general infrastructure, or is the population dwindling? Look carefully at the location and see if you think it has long-term and sustainable appeal.

6. Make the trip. Travel to Canada is easy. It is a good idea to look at what you are buying.

7. Obtain professional advice both at home and in Canada. Engage the services of a tax lawyer on both sides of the border as well as an accountant. For instance, as a non-resident, you must pay tax on rental income and pay tax when the property is sold.

8. Start small. For a first-time investor, try a townhouse. These are not only affordable but there's always a good supply and demand for them and they can give you an affordable income. This holds true in bigger cities such as Toronto, Vancouver, Montreal, and Calgary, where immigrant populations are high. Remember, new immigrants prefer to rent for their first few years in the country and they tend to choose locations close to transportation systems, malls, and grocery stores.

9. Finally. Ensure you investigate specific real estate property rules in the individual Canadian province where you invest. Rules are different from province to province in the areas of land registry, taxes, reporting, and other important areas.

If you use a common sense approach to researching your real estate investment options in Canada, you will be far more successful in your hunt for a profitable piece of Canadian property. Don't forget to research, research, and research to let the money flow in. Good luck!

Selling Your Home? When is the best time to sell?

People decide to sell for a wide variety of reasons. It could be a work-related move, expansion to make space for new arrivals, or less need for space due to a reduction in the number of family members living at home. Some people just fancy a change every once in a while and others decide to cash in when they think they’ve ridden price rises as far as they can.

But is there a good or bad time of the year to sell?  In most cases, certain times of year are definitely more favourable than others.

Should I sell my house in the Spring Real Estate Market?
The Spring market is a great time to list your house for sale. You will find that this is the most traditional time to sell a house. Therefore, the pool of buyers who are looking maybe at its largest. You will, of course, get more money for the sale of your house if you have the most people looking at it.

The downsides to the Spring Real Estate Market
You are not the only seller who is aware of the importance of the Spring Real Estate Market. You may find that there are many houses for sale at this time of year. In markets that are slowing down in many locations, this may drive prices down further.

In addition, there may be many 'lookers' at this time of the year. You will probably find that the number of noisy neighbours and people who are just window shopping are at their peak at this time of year too.

What about selling my house in the Summer?
Summer is not as busy as the Spring Real Estate Market. Many buyers have already purchased their new homes and are planning on moving during the Summer, however, some have not. You may find that there are leftover buyers who have not yet found their dream houses. Maybe yours will fit the bill.

There may also be less inventory on the market, as many houses will have sold during the Spring Real Estate Market. If there are fewer houses to look at, there is an increased chance that yours will sell at a good price.

Fall Real Estate Market
The Fall is probably the second busiest time in real estate. Kids are back in school, vacation time is over and many people use this time to look for new houses. Often the buyers will target Christmas vacation time as a good time to move. You will find that this market kicks in right after Labour Day and runs through Thanksgiving.

You may also find that this is a good time to sell your house. There will probably be more buyers who are ready, willing and able to buy your house during this time of year than during the summer. However, inventory may jump slightly.

One pitfall to be aware of is that Winter is coming. If you are selling your house during the Fall Real Estate Market, be sure not to overprice it. If it does not sell by Thanksgiving, you may be forced to reduce the price more than you would like.

Is it possible to sell real estate during the Winter?
Absolutely! There are many good reasons to sell your house at this time of year. If you find that it is necessary to do so, don't panic. It is essential to price your house correctly at this time of year, however, there will be a limited amount of buyers, so make sure that they don't overlook your house.

Although there will be fewer buyers at this time of year, you can be pretty sure that they are serious, qualified buyers. Most people just don't have the time to be window shopping or looking at houses they have no intention of buying during the holiday season. The same will hold true for the cold month of January. If a buyer makes an appointment to see your house during this time of year, he or she will most likely be a serious buyer.

In addition, your house may be decorated for the holidays and this is a great time to show potential buyers how warm and inviting your house is.

Canadian Real Estate Market Poised for Double Digit Price Increases in 2022

People have been calling Canadian real estate’s upward trajectory “unsustainable” for almost a decade now. But if a global pandemic, followed by a recession, followed by more pandemic hasn’t been enough to cool the market, it’s fair to wonder when conditions will change enough to give homebuyers some hope in the face of dwindling inventory and high prices.

The market will experience its share of changes next year, but Canada’s severe case of real estate fever, and the country’s ongoing shortage of homes for sale, isn’t likely to be broken by any of them.

Canadian home prices are expected to rise by 10.5% in 2022, with Toronto, Vancouver and Halifax projected to see the largest increases. According to the new survey from real estate firm Royal LePage, next year’s forecast follows a record-breaking year in 2021, when housing prices jumped by 21.4%.

“While some believe that housing is now overvalued, signals point to a level of demand that will continue to outpace inventory, keeping prices rising on a steep upward trajectory,” Royal LePage president and CEO Phil Soper said in a statement. “That said, I do expect to see price appreciation ease from the unhealthy levels that we have been grappling with over the last 18 months.”

The 2022 Royal LePage Market Survey Forecast predicts the aggregate price of a home in Canada will increase by 10.5% to $859,700 by late 2022. Aggregate price refers to the “weighted average of the median values” of single-family homes and condominiums in a given area. Royal LePage also anticipates the median price of a single-family detached home in Canada to climb by 11% to $918,000 in 2022, while condominium prices are projected to grow by eight% to $594,000.

In a market characterized by low supply, Soper said the increases will be driven by eager buyers who were unable to secure homes in 2021, rising immigration, as well as low interest rates and a continued emphasis on remote work as COVID-19 variants stifle Canada’s reopening plans, causing people to save more money as travel and entertainment options diminish.

“All of these economic variables have been shown to stimulate housing activity,” Soper explained. “Many of those looking to purchase a home, whether their first, an upgrade, or a recreational property, stand able to take advantage of increased savings and record-low interest rates.”

The biggest increases are expected in the Toronto and Vancouver areas, with the aggregate price of homes rising by 11 and 10.5%. They’re followed closely by Halifax at 10%, which Royal LePage says is driven by out-of-province demand, largely from Ontario.

The smallest increase is expected in Edmonton at five%, followed closely by Calgary, Regina and Winnipeg at six% each.

In Canada, aggregate price predictions show homes will be the most expensive in Greater Vancouver ($1,375,700), Greater Toronto ($1,256,500), and Ottawa ($806,600), while the lowest prices are expected to be found in Winnipeg ($372,100), Regina ($376,300) and Edmonton ($429,000).

Following a pandemic-related downturn, the survey also showed condo demand picking up in 2022 in cities like Montreal and Toronto.

The price appreciation gap between condominiums and detached properties is narrowing. This trend will continue in 2022, as entry-level buyers are priced out of more expensive property segments, and the revival of the downtown core continues.

Don't Forget Your Home-Office Tax Deductions

One of the great virtues of starting a home business is the tax breaks you can claim. However, claiming aggressive write-offs is a sure way to attract CRA auditors. In this article, we'll look at some of the more popular home business write-offs as well as some tips on how you can legitimately claim them.

1. Keep business records
If your wish to claim tax deductibles on your home office expenses, you must get into the record-keeping mindset. You need to establish a means of keeping track of the money that is coming in and the money that is going out. Being audited is not the end of the world. However, being audited and not having the records to back up your deductions can be a nightmare.

The more detailed your accounts are, the easier it will be to face an audit. Compiling your daily reports into a monthly tracking sheet will drastically shorten the time it takes you to get your taxes together, and it will have the added benefit of providing a snapshot of your business month-to-month.

2. Write off your workspace
Writing off a home office can be particularly attractive if you have a line of work that can be neatly confined to a dedicated room. You can still write off part of a shared room, but in either case, the space is calculated as a percentage of the total house or apartment area. That percentage is applied to all the related costs, including utilities, insurance, rent or mortgage payments, and so on.

3. Update your business equipment
Office furniture, software, computers, and other equipment are all 100% deductible within the year that the cost is incurred - you don't need to depreciate. There is an upper limit and the purchases must be majority-usage (primarily used) and necessary or helpful for business.

4. Business phone and internet
If chatting with clients is a necessary part of your business, it may be worth getting a second phone line or a dedicated business cell phone, as both of these are 100% deductible. If you only converse with clients occasionally, you can still write off the costs by noting the dates, times, and reasons for the calls and then circling the items on your regular phone bill to deduct at tax time.

You can also deduct part of the cost of your internet if you use it for business. There is no absolute percentage to use, but it will be difficult to write off more than 50% if other members of your family are using it for non-business purposes. Be reasonable and pick a defensible percentage that you won't regret in the case of an audit.

5. Entertainment expenses
You can wine and dine clients (preferably paying or likely to pay clients) and get a tax break. The tendency for business owners at all levels to abuse this write-off has scared many home business owners away from claiming it. However, it is acceptable for you to take out a client for a meal and some entertainment. It will be easier to defend a $200 deduction for a client who has brought you a lot of business than the same meal for a buddy who paid you $20 for an hour's work over the entire fiscal year.

6. Take a trip, not a vacation
Have to hit the road to expand your market? Save your receipts. On business trips, your travel expenses are 100% deductible and your food expenses can be deducted at 50% of the total. Keep all of your receipts because even things like dry cleaning and tips are considered a necessary expense when you're out pounding the pavement in new markets.

7. Automobile expenses
When it comes to automobile expenses, you can claim registration, repairs, oil changes, and gas. But it’s important you keep a log of the kilometres you are traveling for business on a daily basis, because you may need to prove how frequently you use your car for business.
 
8. Employ (not just pay) your family
You can use family members as employees and deduct their salaries as long as you account for their work and pay the going rate. If you have a business that lends itself to having a spouse and kids help out, then use that labour pool. You'll likely pay less than market rates for the help, and you can deduct insurance premiums for them as well.

9. Make justifiable deductions
Just because you have a home business doesn't mean you can go crazy with deductions. If you don't think you can face down an auditor with detailed proofs justifying the deduction, then perhaps it isn't a deduction you should be taking.

The CRA's T2125 form — Statement of Business or Professional Activities — needs to be filled out to claim these expenses. Page 3 of this form deals with the calculation of what is called business-use-of-home expenses.

Most tax software programs will let taxpayers claim home office expenses, although you may want to upgrade to a more expensive version that caters to the self-employed or small-business owners.

Working from home can result in big tax savings. But the rules are strict and the paperwork can be formidable. It might be wise for first-time claimants to seek the help of a professional.

What is Debt Consolidation?

Feeling overwhelmed by multiple bills? Looking for a solution to growing credit card debt? Reduce your debt, restore your credit and feel relief with a debt consolidation loan. 

A debt consolidation loan is where a bank, credit union, or finance company provides you with the money to pay off your outstanding debts and "consolidate" them (bring them all together) into one big loan. This usually applies to your unsecured debt, which may include your credit card bills, lines of credit, unsecured loans – or any other debt that doesn’t require collateral, such as a home or car. 

Advantages of a Debt Consolidation Loan

1. You only have one monthly payment to worry about
2. You often consolidate at a lower interest rate which saves you money
3. Your debt will be paid off in a set amount of time (typically 2 - 5 years)
4. Simple, monthly fund transfers by telephone banking, debit card, or money order
5. Timely, automatic payments to creditors, with full tracking
6. Any fees charged for this service are usually very low

 

Debt Consolidation Loan Interest Rates
Banks and credit unions usually offer the best interest rates for debt consolidation loans. Many factors can help you get a better interest rate with a bank or credit union including your credit score, your net worth, whether you have a relationship with them, and can offer good security (collateral) for a loan or not. Good security for a debt consolidation loan will often be a newer model vehicle, boat, term deposit (non-RRSP), or another asset that can easily be sold or liquidated by the bank if you don't make your loan payments.

For the past decade, banks have typically charged interest rates on debt consolidation loans of around 7% - 12%. Finance companies tend to charge anywhere from 14% for secured loans to over 3% for unsecured loans.

Disadvantages of a Debt Consolidation Loan

1. They usually require security (collateral)
2. You must have a decent credit score
3. Interest rates are higher than a home equity loan (refinancing your home)
4. Interest rates for unsecured debt consolidation loans can be high

While banks rarely approve unsecured debt consolidation loans, some do get approved from time to time. To qualify for one of these you would typically need to have a high net worth (the value of your assets after you subtract all of your debts) and a very strong credit score or a co-signer who has a very high net worth and a very strong credit score.

What are your chances of getting a Debt Consolidation Loan?
If your credit score meets the bank's minimum requirement (meaning: not too many late payments or any big negatives on your credit report), you earn enough income, your total monthly minimum debt payments aren't too high and you can offer some good security for a loan, then you may qualify for a debt consolidation loan. If you don't quite meet all of these requirements on your own, you may still be able to qualify if you can find a good co-signer.

If your minimum monthly debt payments are too high - even after a consolidation loan is factored into the situation, you have bad credit, or you can't offer some reasonable security for a loan, then a consolidation loan probably won't work.