What is Your Credit Score?

Credit scores can range from 300 to 900 and are used by lenders to determine what kind of a risk you are likely to be as a borrower. Your score is based on several attributes -

Payment History:
The single biggest factor in your credit score is having a timely bill payment history. Recent late payments are factored more heavily than old ones so start today and never let a bill get past due. 

Amounts Owed:
Keeping your accounts near their maximum limit can signal that you don’t manage credit responsibly, and that you may have trouble making payments in the future.

Length of Credit History: 
The longer you have had credit in good standing, the better. Keep your oldest cards; that good history will help you, and don’t regularly take out new credit accounts.

Pursuit of New Credit:
Opening several credit accounts in a short period of time is a risk factor.  How many enquiries done on your behalf can also have an effect on your score.  

Types of Credit:
A healthy mix of credit i.e. car loan, mortgage and credit card is more positive than a concentration of debt in only credit cards.

With an excellent credit score (750 and over), lenders will give you a quick mortgage approval at the best possible rates. This score says you are reliable and responsible with debt. At a lower score (below 620), you likely won’t get the best mortgage rates, you may require a larger downpayment, there could be extra fees, and you may even find it difficult to qualify.
  
Your credit score can change from month to month, which means you can boost your score relatively quickly with the right credit behaviours. We can review your situation and discuss how your score will be viewed by lenders and, if necessary, outline your best options for credit improvement. If you want to get a mortgage while you work on bettering your score, we can also advise how that may be possible.  

Private Second and Third Mortgages Explained.

If we can’t finance your Second Mortgage… NO ONE CAN!

• No Income Requirements
• No Minimum Beacon Score
• No GDS/TDS Requirements
• Up to 90% LTV Loan-to-Value (GTA)
• Same Day Approval and Quick Closing

People Seek and Obtain Second and Third Mortgages for the Following Reasons:

• Mortgage Arrears
• Debt Consolidation
• Stop Power of Sale
• Payout Consumer Proposal
• Property Tax Arrears
• Revenue Canada Tax Arrears
• Previously Bankrupt Clients
• Home Improvements
• Business Start-Up
• Purchase a Second Property
• Business Cash Infusion
• University Tuition
• Child’s Wedding

Second and Third Mortgages Explained:
A private second or third mortgage on a residential or commercial property is by far the most common type of private mortgage financing.  There are reasons for this from both the borrower’s perspective and lender’s perspective.  Borrowers utilize a private second or third mortgage to consolidate debt while leaving their existing first mortgage intact.  A long term first mortgage is likely going to carry a lower rate than a private first mortgage, so if the first mortgage can be left alone a private second or third mortgage can be an excellent source of incremental cash flow.

Borrowers utilize a private second mortgage or third mortgage to consolidate debt while leaving their existing first mortgage intact.  A long term first mortgage is likely going to carry a significantly lower rate than a private first mortgage, so if the first mortgage can be left alone, a private second or third can be an excellent source of incremental cash flow.

With respect to debt consolidation, even at higher than bank rates, a private second or third mortgage can allow the borrower to consolidate short term debt such as credit card balances and still end up with a lower interest rate.  And because private mortgage debt servicing requirements are typically interest only, a debt consolidation loan can provide considerable relief to cash flow as well.

Another key benefit to securing a private second or third mortgage is the speed in which it can be put into place.  While the average first mortgage will be placed in 5 to 10 business days, it is possible to go from application to funding a second mortgage in 2 to 5 business days.

From the lender or investor point of view, private seconds and thirds are ideal for building a portfolio of mortgages and spreading their risk across a number of mortgages.  This is due to the fact that private seconds are typically for amounts under $200,000, greatly limiting the lender risk on any one loan.

Because of the second and third mortgage position, there is greater risk to a mortgage lender, so private second and third rates will also be higher than first mortgage rates, which is also attractive for many lenders that are looking for a certain rate of return on their money.

Lenders will typically charge both an interest rate and a lender fee on closing which collectively makes up their total rate of return on any one deal.

Most private seconds and thirds will provide a term of one year and some will provide an option for term renewal, but that is not typical among private lenders.  In general, the stronger the real estate market in any area, the more private money will be available for second and third mortgages as lenders will have to approve funding on higher loan to value ratios where the related risk can only be managed by the strength of the resale market for similar property types.

Private Second and Third Mortgage Costs:
Although a private mortgage can help borrowers get out of a sticky situation, there are additional costs to consider.

First is the higher interest rate, which can range from a couple of percentage points above the bank rate to upwards of 15 percent.  Lenders weigh the interest rate based on the LTV (loan-to-value), the property location and the overall risk of the loan.

Most private lenders charge between 12 and 15 percent for a 80-90 percent loan-to-value second mortgage.

Other costs borrowers should be aware of with a private second and third mortgage are lender fees, broker fees, legal fees and an appraisal.

How to Get Started:
Give one of our Private Mortgage Specialists a call today at 416-275-9284 or fill-out our Secure Online Mortgage Application at https://www.mortgagedirect2u.ca/mortgageapplication.php

We look forward to helping you with all your mortgage financing requirements.

Mortgage Solutions Available From MortgageDirect2u

Residential Mortgage
If you are ready to close on your next home, let us arrange the mortgage financing on your behalf.  With electronic access to over 60 lenders we will ensure that you receive the best rate for the product of your choice, usually within 24 hours!


First Time Buyer
Are you a first-time buyer?  The residential property you are about to purchase is probably the largest single purchase, and biggest investment decision you have had to make in your life so far.  Let us help you through the confusing maze of lender options, terminology and mortgage documentation.

Debt Consolidation
Have you hit a credit crunch?  High interest debt on credit cards can create a lot of stress.  If you are finding there is more month than money, then perhaps it's time to review your debt situation and consolidate your high interest debt into one low manageable monthly payment.

Equity Take-Out
If you have been living in your home over the past 5 years, you have probably had your net worth increase by a substantial amount.  The problem is that net worth is not very liquid.  If you are ready to invest in your own small business, or you need to fund your daughter's university tuition, your home equity can be a ready source of cash to finance your dreams.

Mortgage Renewal
Is your mortgage up for renewal?  Do you want to be sure you are getting the absolute best mortgage rate in the market today, the rate you deserve?  Contact us today!

Personal Line of Credit
We can arrange a convenient personal line of credit at very competitive rates secured against your residential property.

Business for Self Alt-A
Business for self financing allows clients who cannot provide traditional income verification, such as the self-employed or 100% commissioned salespeople, to qualify for a high ratio mortgage for purchase or refinance purposes.

Refinance
Allows you to access up to 95% of your home's current value; 
freeing up your cash for a variety of needs.

New to Canada
Allowing those who have immigrated or relocated to Canada to own 
their first home with as little as 5% down.

Draw Mortgages
Allows residential home builders and individual homebuyers to 
take advantage of insured progress advances while the property is
being built.

Commercial Projects
We have a number of both institutional and private lenders in our network that are available to fund commercial real estate projects in Ontario.

Should you Give Your Child a Boost to Home Ownership?

With the financial demands of school loans, living expenses, and finding a career path, many young people struggle to purchase their first home. Often, parents and grandparents are very sympathetic. They’ve enjoyed the financial benefits of long-term home ownership themselves, and see how hard it is today to make that important first step into the real estate market. So should you give them a boost?

First, consider your own financial situation. Your first responsibility is to your own financial security, so you need to consider what kind of help you can afford. If you loan the money and it is never repaid, will it affect your own financial security?  Can you afford to gift the money, and if so, how much?

Take some time to think about family dynamics.  Are there siblings or other family members to consider? Will there be an issue of fairness that you need to manage? Some families work well with a structured loan arrangement with a modest interest rate that gives the young family member an opportunity to buy the home – but also sets out the expectations for loan repayment. It can foster good borrowing habits and minimize family friction later.

Home ownership is a big financial responsibility. You know there are more costs to homeownership than just paying the monthly mortgage payment:  like heat, hydro, insurance, cable, taxes, and of course repairs and upkeep. Before you offer your child a boost to home ownership, consider whether they’re ready for the financial responsibility. Sometimes, the best advice is to keep renting for a while and take more time to get ready for the responsibility of a large mortgage.

If your child is married or living with a partner, consider property law. Experts advise parents to structure a loan to a child if there is a spouse or partner to consider. Should a marriage break up, for example, you may discover that 50 per cent of the money went free and clear to your child’s partner as part of a settlement of family property. A fairly simple fix is to structure a loan – even with 0% interest or with no regular payments – but with the ability to call the loan at any time.  In that way, the loan would be subtracted from the family property before being divided.

Always put it in writing. If it’s a loan, you’ll want a written record of your shared expectations. If it’s a gift, you must put it in writing for the lender that the child is not required to pay the money back at any time
. 
Talk to us! Your child is preparing to embark on an important financial journey, and you want to do your best to help get them on the right path. The best place to begin is with sound, expert advice.  Start them on a good financial habit and send them to us for access to the most mortgage options and clear-eyed, common sense advice.

What is Your Credit Score?

Credit scores can range from 300 to 900 and are used by lenders to determine what kind of a risk you are likely to be as a borrower. Your score is based on several attributes -
Payment history 

The single biggest factor in your credit score is having a timely bill payment history. Recent late payments are factored more heavily than old ones so start today and never let a bill get past due. 

Amounts owed
Keeping your accounts near their maximum limit can signal that you don’t manage credit responsibly, and that you may have trouble making payments in the future. 

Length of credit history 
The longer you have had credit in good standing, the better. Keep your oldest cards; that good history will help you, and don’t regularly take out new credit accounts. 

Pursuit of new credit 
Opening several credit accounts in a short period of time is a risk factor.  How many enquiries done on your behalf can also have an effect on your score.  

Types of credit 
A healthy mix of credit i.e. car loan, mortgage and credit card is more positive than a concentration of debt in only credit cards.

With an excellent credit score (750 and over), lenders will give you a quick mortgage approval at the best possible rates. This score says you are reliable and responsible with debt. At a lower score (below 620), you likely won’t get the best mortgage rates, you may require a larger down-payment, there could be extra fees, and you may even find it difficult to qualify.
  
Your credit score can change from month to month, which means you can boost your score relatively quickly with the right credit behaviours. We can review your situation and discuss how your score will be viewed by lenders and, if necessary, outline your best options for credit improvement. If you want to get a mortgage while you work on bettering your score, we can also advise how that may be possible.  

Dreaming of Home Ownership: Toronto, Mississauga GTA First & Second Mortgages

DREAMING OF HOME: 
Home ownership can make great financial sense. Over the long term, residential real estate has been a very strong asset – showing excellent appreciation. Renters who add up what they've shelled out during their renting years are often shocked to see how much mortgage help they've given their landlord. Most would prefer to have that money build their own home equity.
  
If you're dreaming of a home of your own, then there's good news. Getting into today's housing marketing isn't out of the question if you do some good common-sense planning.

RUN THE NUMBERS: First, determine what you can afford.
It happens: you fall in love with a home that seems perfect, but it is way outside your possible price range. Before you go looking at homes - and long before you consider putting an offer on one – you need to run the numbers. Get some professional guidance – there’s more to home ownership than a mortgage payment – and determine exactly what you can comfortably afford.

Meet with us first. Independent mortgage brokers are expert at providing the advice, education and resources that first-time buyers need. We can offer advice on boosting your credit rating, determining an affordable mortgage payment, and advising you on the extra costs that come with buying a home. Generally, you can expect to pay between 1.5% and 4% of the home’s selling price in total closing costs.
  
We can also make sure you have a pre-approval with an attractive rate – usually good for 90 to 120 days – so you’re house-shopping with a plan and a budget. Doing this work ahead of time will make you a confident and informed home-buyer. You’ll know exactly how much house you can afford – before you ever start dreaming of home!

GETTING THAT DOWN-PAYMENT: It might be easier than you think!
For many first-time home-buyers, that down-payment is one of the big obstacles to home ownership. Saving up cash – especially if you’re paying rent, paying down student loans, and trying to live a life – can be slow and difficult work.
In most cases, you’ll need to save up at least 5% of the purchase price of your home. But there are some programs and tips we can offer to give your down-payment a boost – to get you into your home faster: 

1. Home Buyers' Plan (HBP) lets first-time home-buyers withdraw up to $25,000 each (or $50,000 for a couple) tax-free from their RRSPs.  You’ll need to pay those funds back, of course, on a repayment plan. 

2. A financial gift from a parent or blood relative can be used as a down-payment. This can not be a private debt; you’ll need to document in writing that the funds are a gift and you are not required to pay the money back at any time.

3. Start small. If your dream home is out of reach, look for a starter home. Use today’s low interest rates to start hammering down your first mortgage, then watch for the opportunity to get the home of your dreams – using the equity and credit rating you’ve been building!

Talk to us today – to ensure that you get off on the right foot in your home buying journey!

BEYOND RATE: Get expert advice
There’s a tendency to go rate shopping when you’re looking for a mortgage. After all, a great rate can save you thousands and help you better manage your debt. And that’s one reason so many first-time homebuyers are working with independent mortgage brokers. Most brokers have access to a wide range of established lenders – up to 50 – including major banks. They can compare rates across the board and show you where the best bargains are for your situation.

But the real value of a mortgage broker goes beyond rate. A mortgage broker provides invaluable education on mortgage preparedness. A first-time home-buyer should see a mortgage professional early – for tips to boost your credit rating (so you qualify for the best rates), and for advice on downpayment options. Your mortgage broker can sort through all of the mortgage options and get the right combination of features, privileges and rate that is best matched to your needs. It’s so important to consider term, prepayment options, refinancing penalties, restrictions, and fees because the right choices can save you thousands. 
Dreaming of home? Come see us. We’ll get you started!

CREATE AN EMERGENCY FUND:  Someday, something will go wrong.
Somewhere in that first-time home-buyer’s budget you need a line item that says “Emergency Fund”. You may think that you don’t need it; if something happens, you could take out a Line of Credit, right?

Every homeowner should have an Emergency Fund set aside.  That’s because someday, something will go wrong.  Imagine the roof suddenly starts to leak. Or you discover mould in the basement. Or maybe you get hurt and need to take a month or two off work. What happens to your carefully designed budget then?

Having an emergency fund in place before you buy a home will give you peace of mind – knowing you have some financial buffer to tackle an unexpected financial obstacle.
So what about that Homeowner Line of Credit? Well your mortgage broker can provide some guidance; it’s often a good idea to have a low-interest financial safeguard – before you need it. Just keep in mind that it is also borrowed money. If you use your Line, you’ll need to budget carefully to pay it back.

Why Use a Mortgage Broker?

A great rate is important – but it’s all the other terms that add up to a great mortgage.  Most people assume the lowest rate means the best mortgage.  Banks know it – that’s why they display their rates in large numbers everywhere you look.  A mortgage broker understands that rate is only one aspect of the mortgage, and that negotiating other terms to your advantage will maximize your savings in the long run.  We’ll help you get the whole package – a great rate plus the best amortization schedule, payment frequency, flexible repayment terms, transferability, and more so you don’t find yourself trapped with huge penalties if your needs change.

Applying for mortgages with several banks can harm your credit rating.  Many people are surprised to learn that skipping payments isn’t the only way to damage a credit rating – the truth is, you weaken your credit rating with every application you fill out.  This is because each bank pulls a credit bureau on you to assess your application and these inquiries are reflected on subsequent bureaus.  Many lenders consider multiple inquiries to be a red flag on your credit.  A good credit rating is critical in getting the best mortgage rate and terms.  A mortgage broker protects your credit by pulling just one credit report and submitting it to lenders on your behalf.  This way you can shop for the best possible mortgage amongst many lenders without damaging your credit rating.

A mortgage broker can often negotiate a better deal than you can.  Don’t take this personally – it’s not necessarily a reflection on your negotiating skills.  Thanks to industry affiliations and memberships, mortgage brokers have access to discounts that aren’t available to the general public.  Plus, experience tells us which terms lenders will flex on, so we can shape a mortgage to your exact needs.  One note of caution, however: once you start an application personally, a mortgage broker can’t step in and negotiate you a better deal with that same bank.  That’s why it’s important to let your mortgage broker handle the process from start to finish.

A pre-approval isn’t a commitment from your bank – it’s just an indicator of what you can afford should you be approved.  A pre-approval is a clever marketing tool on the part of banks.  It appears as though the bank has promised to fund your mortgage once you’ve found a house in your price range.  The reality is, it’s only a promise to hold a rate for you within a certain time frame – you still need to qualify for the mortgage once the time comes to purchase your home.  The last thing you want when you’ve found your dream home is to lose it because the bank is dragging its heels or offering different terms than you expected.  A mortgage broker can help ensure a smooth process from start to finish, so you won’t experience any nasty surprises - just the excitement of purchasing your new home.

There’s a world of mortgage products the average person doesn’t know about.  Most people aren’t aware that banks offer only a fraction of the mortgage products available.  A mortgage broker, however, is an expert on the different products and lenders in the industry and stays abreast of changing market conditions.  That knowledge can be invaluable in finding the best mortgage for your needs.  Self-employed?  New to Canada?  Looking to buy a rental property?  A mortgage broker can help you qualify for specialized mortgage products like these and many more.

There’s more to most variable rate mortgages than meets the eye.  Just like mortgages, people typically fall into two categories: Variable Rate or Fixed Rate.  “Fixed rate” people feel most comfortable when they know their exact mortgage payment at all times.  “Variable rate” people are willing to experience the uncertainty of their payment amount in exchange for the savings that come with it Variable rate terms and conditions can be quite complex, however.  A mortgage broker has the expertise to sort through the conditions, explain their implications to you and help you find the right variable rate mortgage for you.

Your mortgage broker works for you, not your lender.  When you visit a bank, the representative’s job is to recommend their mortgage products to you, regardless of whether they really suit your needs.  A mortgage broker, however, has no such mandate – our only job is to ensure you get the best mortgage possible.  Think of it this way.  You probably wouldn’t buy a house without the advice of a real estate agent.  Nor would you close the sale without a lawyer.  Why?  Because they’re specialists in the field of home buying – they know the right questions to ask and the proper steps to take to minimize the risk that you’ll regret your purchase later. 

MortgageDirect2u
http://www.mortgagedirect2u.ca
416-275-9284

Private 2nd & 3rd Mortgages Explained.

A private second or third mortgage on a residential or commercial property is by far the most common type of private mortgage financing.

There are reasons for this from both the borrower’s perspective and the lender’s perspective.

Borrowers utilize a private second mortgage or third mortgage to consolidate debt while leaving their existing first mortgage intact.  A long term first mortgage is likely going to carry a significantly lower rate than a private first mortgage, so if the first mortgage can be left alone, a private second or third can be an excellent source of incremental cash flow.

With respect to debt consolidation, even at higher than bank rates, a private second or third can allow the borrower to consolidate short term debt such as credit card balances and still end up with a lower interest rate.  And because private mortgage debt servicing requirements are typically interest only, a debt consolidation loan can provide considerable relief to cash flow as well.

Another key benefit to securing a private second or third mortgage is the speed in which it can be put into place.  While the average private 2nd or 3rd will be placed in 5 to 10 business days, it is possible to go from application to funding in 2 to 5 business days as well.

From the lender or investor point of view, private seconds and thirds are ideal for building a portfolio of mortgages and spreading their risk across a number of mortgages.  This is due to the fact that private seconds are typically for amounts under $200,000, greatly limiting the lender risk on any one loan.

Because of the second and third mortgage position, there is greater risk to a mortgage lender, so private second and third rates will also be higher than first mortgage rates, which is also attractive for many lenders that are looking for a certain rate of return on their money.

Lenders will typically charge both an interest rate and a lender fee on closing which collectively makes up their total rate of return on any one deal.

Most private seconds and thirds will provide a term of one year and some will provide an option for term renewal, but that is not typical among private lending.

In general, the stronger the real estate market in any area, the more private money will be available for second and third mortgages as lenders will have to approve funding on higher loan to value ratios where the related risk can only be managed by the strength of the resale market for similar property types.

Buy and Renovate Mortgage

Many home-buyers looking at older properties find themselves in a common predicament: they have found a property that suits them, but it needs some costly and immediate upgrades. 

Many buyers add the costs of those immediate renovations into their mortgage, instead of racking up credit card bills or selling investments to pay for the upgrades.  Known as a “purchase plus improvements” mortgage, this type of mortgage covers the sale price of the home, plus any renovations that would increase the value of the property, with as little as 5 per cent down.   

If you’re buying a home but want to add a second storey, finish a basement or redo a kitchen, it can make a lot of sense to add those costs to your mortgage.  That way you can spread your payments over the life of the mortgage and have a cost-effective way to get your dream home.  You can also use your pre-payment privileges to pay the renovation off faster.  The process is quite simple:

Obtain cost estimates for the upgrades

Once you have found a home, you need to get detailed written quotes from licensed contractors on the renovations you plan, outlining the scope and all costs.

Get your appraisal

An appraisal with two separate values will be required: first the value of the property "as is" and the estimated value of the property once the improvements are completed.

Renovation costs are included in your mortgage

Your lender will add the estimated costs of the renovation into your mortgage.  For example, with a 5% down payment, your mortgage broker would apply for 95% of the “as improved” market value, which will be higher than the actual purchase price.  The committed amount of the mortgage will be advanced to your solicitor, who will be instructed to hold back the renovation funds until the work has been completed and inspected.

Complete your upgrades; funds are released upon completion

Once an inspection from an appraiser confirms all work is complete and a copy of the building permit (if applicable) has been received, the balance of the mortgage funds will be released to you to pay for the renovations. There are a few options for carrying your expenditures until the funds can be released.  Some major home improvement retailers offer “no payment” options for up to six months.  Larger contractors may also be willing to finance the project short-term if they see the documentation for purchase plus improvements financing. 

Example:

Purchase price:    $400,000
Improvements:      $40,000
Total mortgage:   $418,000 (95% of $440,000)
$378,000 will be released on closing date. $40,000 will be released upon completion of improvements i.e. improvements are 100% complete and a final inspection has taken place.  

Be sure to consult with a mortgage professional to learn about the full range of options available to you when purchasing a fixer upper.

CMHC Guarantee on Mortgage Insurance Putting Taxpayers at Risk: OECD

TSX -12.25 to 14,892.13 (CP)  the indexes took a breather from the near record levels hit in the last few sessions

Dow -102.04 to 16,843.88 The World Bank has said it plans to cut its 2014 global growth forecast to 2.8 per cent from 3.2 per cent, citing a bitter American winter and the political crisis in Ukraine. However, recent data such as solid U.S. hiring and stronger Chinese exports in May suggest prospects for growth in the second half of the year aren't all pessimistic
     
Dollar +.03c to 91.71cUS
 
Oil +.05 to $104.40US    amid a report from the U.S. Energy Department that oil supplies fell by 2.6 million barrels in the week ended June 6, more than double the 1.2 million barrels analysts expected.

Gold +$1.10 to $1,261.20US
 
Canadian 5 year bond yields markets  +.0 to 1.60.  The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate Published mortgage rate of 3.29) is just below the profit range at 1.69. If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.75 and 1.95. Investors are currently accepting far below to achieve market share in spring market



CMHC guarantee on mortgage insurance putting taxpayers at risk: OECD

Julian Beltrame, The Canadian Press

OTTAWA - The federal government needs to limit the percentage of a mortgage loan it is willing to insure in order to protect taxpayers if the overheated housing market goes bust, according to a new report on Canada by a major international think-tank.

In the first major survey of the Canadian economy in two years, the Organization for Economic Co-Operation and Development takes particular aim at risks in the housing market, while also chiding the country's environmental record, the oilsands and skills training.

The report — which contains a dedication to the late finance minister Jim Flaherty from the group's secretary general, Angel Gurría — is mostly complimentary about the state of the Canadian economy but raises a number of concerns, including growing inequality, the two-speed economy and Canada's environmental record.

It takes special aim at the housing market, particularly increasing unaffordability in certain big cities like Vancouver, and high household debt which leaves families vulnerable to interest rate hikes.

"Almost 40 per cent of the country’s population lives in a city where house prices are seriously or severely unaffordable," it states. "A shock to even one segment could have spillover effects to the broader economy if banks respond by tightening credit significantly or if negative wealth effects depress consumption."

Given such risks, the OECD wonders why the government allows Canada Mortgage and Housing Corp. to insure 100 per cent of high-leverage mortgages when most other countries limit potential losses to 10 to 30 per cent of outstanding balances.

"Imposing a deductible on mortgage insurance, as is common in other lines of insurance, would help promote stability by better aligning the interests of the lenders and those of the insurer, thereby reducing moral hazard," it recommends.

"Over the longer run. the insurance activities of CMHC could be privatized, shifting the government's role to one of guaranteeing only against catastrophic losses," it added.

Speaking to reporters at International Economic Forum of the Americas in Montreal, Gurria said he wasn't overly worried about a housing market crash in Canada.

"The concern more than a crash is about affordability," he said.

Former finance minister Flaherty had also speculated about privatizing the Crown corporation, and Ottawa has taken steps to rein in its activities, including the most recent announcement that it would no longer insure condominium construction. It has also dropped insurance on second homes.

One danger of the government-backed safety net is that lending standards are reduced since banks are protected against default.

Finance Minister Joe Oliver has come under pressure to intervene in the market after recent moves by Canadian banks that have taken five-year fixed rates below three per cent. But, speaking in New York, the minister downplayed the danger saying rates had not come down very much.

"We don't believe there is a major problem," he said.

The wide-ranging report analyses most economic and fiscal issues facing the country and expresses concern over the lack of skilled workers for some sectors in some regions, particularly resource-rich Alberta and Saskatchewan.

In a separate paper, the OECD says federal and provincial governments must co-operate with local authorities and schools in educating and training Canadians for the jobs that are in demand.

"Skills shortages in certain fields and regions could limit growth going forward," it warns, adding that the average apprenticeship completion rate was only 50 per cent between 2000 and 2011.

The OECD says some of the problem could be ameliorated by better data on job vacancies — a point made again Wednesday by economist Don Drummond in a paper for the Institute for Research in Public Policy.

In the Commons, opposition MPs criticized the government for slashing funding on labour information gathering by 20 per cent, saying it shows the government's is not interested in reliable data to guide its Temporary Foreign Workers program.

The OECD was also critical of Canada's environmental record, calling the expansion of the oil sands in Alberta the principal reason the country won't come close to meeting its 2020 target on reduction of greenhouse gas emissions. That's because oil sands expansion is projected to increase oil and gas emissions by 23 per cent by 2020.

It recommends that Canada increase the pricing on carbon emissions, noting that currently it has one of the lowest effective tax rates on carbon among industrialized countries.

"We are on a collision course with nature," Gurria said of the report's findings. "We cannot sustain long-term growth in our economies if we do not protect and preserve our environment."

Generally, the OECD says Canada's economy is doing relatively well with expected growth rates of 2.5 per cent this year and 2.7 per cent in 2015.

But it warns that inequality is rising and that it is increasingly becoming a two-speed economy, as Bank of Canada governor Stephen Poloz has described it, with resource-rich regions doing well at the expense of other regions.

"The emergence of low-cost competitors in emerging economies and exchange-rate appreciation resulted in slower growth in the manufacturing-based economies of Ontario and Quebec," it said.

It didn't limit its criticism only to the federal government. The OECD also chided oil-producing provinces for not taxing its producers sufficiently and for not socking away enough of the revenues from non-renewable resource extraction for future generations, as Norway has done.

Six Things to Know about Real Estate Deposits

TSX -74.15 to 14,514.74 (CP)  Resource and financial companies were the main culprits as traders wondered if economic conditions warranted further moves up for stocks.  
Dow +44.50 Fri +20.55 Mon to 16,511.81    U.S. indexes registered gains amid a disappointing read on consumer confidence but a strong showing for housing starts.
Dollar +.17c to 92.11cUS  
Oil +.52 to $102.02 US  
Gold -$.20 to $1,293.40US
 
Canadian 5 year bond yields markets  +.01 to 1.54.  The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate Published mortgage rate of 3.29) has leapt back into the profit range at 1.75.  If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.75 and 1.95. Investors are currently accepting far below to achieve market share in spring market


Six things to know about real estate deposits

When you make an offer on a house you have to put down a deposit. Here are some things to keep in mind.



Mark Weisleder Real Estate, Published on Fri May 16 2014

Here are some answers to common questions about deposits when you are buying a house.

When must a deposit be paid?

In Ontario, the standard real estate contract gives the buyer two choices; you can pay the deposit immediately when you make an offer, or you can agree to pay it within twenty four hours after the seller accepts it. Most buyers prefer the second option. If you are in a bidding war, you will be encouraged to come up with the deposit immediately, to show good faith to the seller.

Can the buyer get out of a deal by refusing to pay the deposit?

No. Once the deal is accepted, you can’t change your mind. If you do, the seller can sell the property again and if he gets less money than you were going to pay the seller can sue you for the difference, plus legal fees.

What happens if the deposit is paid late?

The seller has the right to cancel the deal. This is because all time limits matter in a real estate contract and if you are late, even by a few minutes, the seller can try and cancel. I have seen this happen many times, especially when the seller knows that there is another buyer out there who will pay more money. If you need more time to come up with your deposit, say so in your offer.

How much should a buyer pay as a deposit?

This is a tough question, and will largely depend on where your home is located. In Toronto, deposits are now usually up to 5 per cent of the sale price. In Brampton, it is closer to 2 per cent. In some areas of Ontario, deposits can be as little as a few hundred dollars.

Why does the deposit go to the seller’s real estate agent and not the seller?

If the seller goes bankrupt or disappears with the deposit, the buyer is not protected. When the deposit is held by the real estate brokerage, it is in trust and is also protected by insurance so even if the brokerage goes bankrupt, the buyer can get their money back.

If the buyer is unhappy with their home inspection, can the seller refuse to return the deposit?

This happens more than you think. A deposit cannot be released unless both the buyer and seller agree. If a seller believes the buyer did not act in good faith in trying to satisfy their condition, whether it is a home inspection, financing or a condominium status certificate review, they can refuse to release the deposit. This means it stays in the broker’s trust account until a judge decides who gets it, which can take years. As a precaution, buyers should consider making two deposits in their offer, a small one of say one per cent when the offer is accepted, and a second larger deposit once the condition is satisfied.

Understand the rules about deposits before you sign any real estate contract. It is expensive to change your mind later.

Is it Possible to get a Perfect Credit Score?

TSX -84.84 to 14,588.89 (CP)   amid data showing the economic recovery in the European Union proceeding at a slower than expected pace and a disappointing outlook from retail giant and economic bellwether Wal-Mart stores.

Dow -167.16 to 16,613.97   leaving the index in negative territory for the year to date. Wal-Mart's quarterly earnings came in at $3.59 billion, or $1.11 per share, down from $3.78 billion, or $1.14 per share a year ago as bad winter weather kept shoppers away. Its performance missed Wall Street’s view and, on top of that, the world’s biggest retailer gave a second-quarter earnings forecast below analysts’ estimates. Meanwhile, Eurostat, the EU’s statistics office, said the eurozone saw output grow by only 0.2 per cent in the first quarter from the previous three-month period. Economists had expected a 0.4 per cent increase. The figures are likely to strengthen arguments for the European Central Bank to cut interest rates and take further stimulus measure at its next meeting June 5.

Dollar +.05c to 91.94cUS  
Oil -.87 to $101.50 US  
Gold -$12.30 to $1,293.60US
 
Canadian 5 year bond yields markets  -03. to 1.53.  The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate Published mortgage rate of 3.29) has leapt back into the profit range at 1.76.  If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.75 and 1.95. Investors are currently accepting far below to achieve market share in spring market
http://www.marketwatch.com/investing/bond/tmbmkca-05y?countryCode=bx



The references to FICO are the same as our Canadian Beacon Scores.

Is it possible to get a perfect credit score?

Jenna Lee | U.S.News & World Report LP – Fri, 9 May, 2014

Some people obsess over perfect grades. Others find fulfillment in bowling a perfect 300. Still others make it their life goal to earn the highly elusive perfect credit score. But while getting A's on all your midterms and even bowling 300s are fairly attainable goals, perfection in the credit world is practically unheard of. Can it really be done? And more importantly, is it a worthy goal to strive toward? Here's why the perfect credit score may not really matter in the end.

Is it possible?

Yes, it's possible to get a perfect credit score. However, this answer comes with a few caveats. First off, the "yes" assumes you're thinking about the 850 FICO score. While the FICO score is the most common score lenders use to determine your creditworthiness, it's not your only score. There are dozens of scoring models that can be used to determine your score, and each model calculates your score differently. So even if you achieve a perfect score with one model, your other scores may be very different.

Secondly, even if someone is able to achieve a perfect score, there's no guarantee that it will stay that number or he or she will be able to reach it again. Credit scores change constantly, and every time someone pulls your score, it's calculated anew.

Credit scores are also notoriously mysterious. While most people know they should pay their bills on time and avoid unnecessary hard inquiries, there is no "magic formula" out there that consumers can follow to earn a perfect score. So even the most credit-savvy consumers may not be able to repeat their success or pinpoint what exactly got them to the top.

Lastly, a perfect score is extremely rare and almost impossible to attain. In 2010, the Fair Isaac Corporation, the creator of FICO scores, estimated that only about 0.5 percent of consumers are able to reach the 850 mark. In fact, it's so uncommon that when people do achieve it, they sometimes get into the news.

Is it worth it?

Greatness is always a good goal to strive toward. However, is it worth spending ridiculous amounts of time and money stressing over a perfect credit score? In most cases, no. While it doesn't hurt to desire and try to obtain an excellent score, you don't need a perfect score to get the best rates as a consumer. As FICO spokesman Anthony Sprauve told Forbes last year, "It's important to understand that if you have a FICO score above 760, you're going to be getting the best rates and opportunities." In other words, lenders aren't looking for a perfect credit score -- they're simply looking for a score that indicates you're a responsible borrower. Most people want the 850 just so they can say they're at the top.

How can I improve my credit health?

As the inspirational quote "shoot for the moon and even if you miss you'll land among the stars" encourages, it never hurts to aim high, especially when you're dealing with something as important as your credit. So whether you're looking to achieve that elusive 850 or just want to improve your credit health, here are a few simple tips to start:

-- Dispute errors. Since you'll want your score to be an accurate representation of your credit history and creditworthiness, you'll need to make sure the credit reports your scores are based on are error-free. To do this, pull your credit reports at AnnualCreditReport.com each year, scrutinize them for errors and dispute any inaccuracies you see. A 2013 Federal Trade Commission study found that 25 percent of credit reports could contain errors that impact scores, so don't just assume your credit reports are always accurate -- it could end up costing you.

-- Don't utilize too much credit. Whenever possible, it's best to not rack up too much debt on your cards. Instead, try only using 1 to 20 percent of your total credit limits. This shows lenders that you're responsibly using your cards, but you're not dependent on them or desperate for credit.

-- Monitor your score. It's hard to improve your score without knowing what it is and what's affecting it. The good news is that monitoring your credit doesn't have to cost you money. Free credit monitoring services allow you to easily track your score over time and see the fluctuations that could signal significant changes in your credit health.

-- Pay your bills on time and in full. Having a perfect on-time payment percentage is one of the best things you can do for your credit, as just one late payment can wreak havoc on your score for years. Paying your bills in full won't necessarily improve your credit health. However, this habit can save you a lot of money on interest that you can use to pay off other things.

-- Limit hard inquiries. While they won't kill your score, hard inquiries can slightly lower your score, so apply for new accounts with caution. Keep in mind that applying for a credit card isn't the only way to receive a hard inquiry -- even renting a car, getting a TV or high-speed Internet account, or opening a checking account may incur a credit inquiry.

-- Be patient. Good credit takes time to build. Whether you're waiting for those derogatory marks to fall off your report or simply waiting for your average age of accounts to rise, there's unfortunately nothing you can do to speed up time.

The bottom line: While a perfect credit score is attainable, it's extremely rare and isn't worth stressing over. Like money, you can't take your credit score with you when you pass away, so focus instead on improving your credit health, getting your score into the optimal range and enjoying the fruits of your time and effort. Good luck!

Real Estate Regrets: What new homebuyers wish they had done differently!

TSX -11.97 to 14,534.06 (CP) as unexpectedly sluggish jobs data and worries about escalating tensions in Ukraine spurred declines in the energy and financial sectors.  
Dow +32.37 to 16,583.34    
Dollar -.62c to 91.78cUS  as Statistics Canada reported that the economy cut 28,900 jobs in April against expectations of a gain of about 12,000. It was also a huge turnaround from the previous month when the economy cranked out 43,000 jobs, which means just 14,000 jobs were added over the two-month period. The unemployment rate held steady at 6.9 per cent
Oil -.27 to $99.99 US  
Gold -$.10 to $1,287.60US
 
Canadian 5 year bond yields markets  -.03 to 1.62.  The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate Published mortgage rate of 3.29) has moved well below  the profit range at 1.67.  If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.75 and 1.95. Investors are currently accepting far below to achieve market share in spring market




Real estate regrets: What new homebuyers wish they had done differently

Hal M. Bundrick | MainStreet.com – 6 May, 2014

You wanted a home with a pool but got a porch instead. A big back yard? No, you went with brick back yard just a bit bigger than your grill. What seemed to be a quiet neighborhood during the Sunday afternoon open house turned out to be because the neighbors were sleeping off their every-Saturday-night booze and brawl. Real estate regrets are many, and homeowners are quick to admit what they should have done differently.

Nine out of every ten buyers felt prepared when they bought their home, but after the fact, well more than half (56%) wish they had known more about the financial process involved in buying a home. The loan closing process was at the top of the should-have-known-more list (22%), followed by making an offer and negotiating (19%) and financing (15%), according to a new survey by Chase.

Nearly four in ten (39%) said that knowing what they know now, they would have bought a different-size or different-priced home, perhaps even in a different neighborhood. Most recent homebuyers were surprised by how long the purchase process took, too: 40% said it took longer than they expected.

More than one-third (34%) said owning a home cost more than expected. And while more than 80% of buyers considered their home move-in ready, nearly as many (76%) now admit they've done, or are planning to do, renovations to their home soon.

A survey fielded one year ago by Trulia found similar results. More than one third (34%) of homeowners with regrets responding to a March 2013 poll said they wished they had chosen a larger home.

Other regrets included:

• Wish I had done more remodeling on the home than I did (27%)
• Wish I had more information about the home before I decided (22%)
• Wish I had made a larger down payment (18%)
• Wish I had been more financially secure before buying (16%)
• Wish I had chosen a home with a shorter commute to work (15%)

It seems buyers may find fewer homes to choose from combined with higher prices this year. Pending home sales rose in March, the first gain in nine months, according to the National Association of Realtors. While home sales are expected to trend up for the balance of the year and into next, NAR expects total sales to fall below last year's pace, with existing-home sales predicted to total just over 4.9 million this year – well below the nearly 5.1 million sold in 2013. But, with ongoing inventory shortages in much of the nation, median existing-home prices are expected to rise between 6% and 7% this year.

Private Mortgage Insurers Opt Not to Match CMHC’s Cuts

Canadian 5 year bond yields markets  -.01 to 1.63.  The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate Published mortgage rate of 3.29) has moved well below  the profit range at 1.66.  If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.75 and 1.95. Investors are currently accepting far below to achieve market share in spring market


Private mortgage insurers opt not to match CMHC’s cuts

TARA PERKINS - REAL ESTATE REPORTER The Globe and Mail  May. 02 2014

Canada’s two private-sector mortgage insurers have decided not to match all of Canada Mortgage and Housing Corp.’s recent product cuts.

Genworth MI Canada sent a letter to banks Friday saying that it will not be making any changes to its standards for self-employed borrowers.

Genworth will, however, tighten its rules for second homes slightly. As of May 30, it will only sell second-home mortgage insurance on homes with one unit in them, rather than two (such as duplexes or a self-enclosed apartment in a house).

Up until now, Genworth has been willing to insure second homes with two units, as long as one of those units was occupied by the mortgage holder or one of their immediate family members.

Canada Mortgage and Housing Corp. (CMHC) said last week that, as of May 30, it will stop insuring mortgages on second homes and will stop offering mortgage insurance to self-employed people who don’t have standard documents to prove their income.

“There will be no amendment to the maximum number of Genworth-insured properties per borrower,” Genworth said in its letter to lenders.

Canada Guaranty, the country’s third-largest mortgage insurer, is similarly limiting its second-home insurance to one unit, but not changing its rules for self-employed borrowers.

Mortgage insurance is mandatory in Canada for federally-licensed lenders when a borrower takes out a mortgage with a down payment of less than 20 per. The insurance pays the bank back if the borrower defaults on their loan.

Mortgage Reforms in Store for Canada

Canadian 5 year bond yields markets  +.02 to 1.69.  The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate Published mortgage rate of 3.29) has moved well below  the profit range at 1.60.  If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.75 and 1.95. Investors are currently accepting far below to achieve market share in spring market



Mini or maxi mortgage reforms in store for Canada?

Finn Poschmann, Special to Financial Post | April 22, 2014

Minor reforms from the Office of the Superintendent of Financial Institutions don’t eliminate the need for major changes

The Office of the Superintendent of Financial Institutions last week released its long awaited draft guidelines, known as B-21, on prudent behaviour for federally regulated mortgage insurers. Think of it as the know-your-mortgage-originator rules. Good steps to take amid a seeming calm in housing markets – and where they will lead is up to the new finance minister, Joe Oliver.

Canada has three mortgage insurers. The largest, Canada Mortgage and Housing Corporation, dominates the market, typically providing insurance cover for about two-thirds of insured mortgages, and federal taxpayers comprise the sole shareholder, by way of Ottawa. CMHC’s two private competitors are Genworth Canada and Canada Guaranty.

It is a strange market. When a CMHC-insured mortgage goes bad, the agency more or less makes whole the approved lender that extended the mortgage loan. Any losses, missed interest payments or principal, or settlement costs, ultimately flow through to the Government of Canada’s bottom line. Not so for the private competitors – they are on the hook for losses, and the impact flows through to private shareholders.

However, if the market went really bad, and the private insurers themselves were bust, 90% of their liabilities would be covered by federal taxpayers.  The explicit guarantee makes it possible for lenders to raise capital or to borrow almost, but not quite, as cheaply as CMHC, whose capital costs are nearer to the Canadian government’s.

What the three insurers have in common is that they lift risk from financial institutions that extend mortgage loans, and such insurance is required when homebuyers have less than a 20% downpayment.  CMHC goes further, and will insure, for a low, low price, bundles of mortgages extended to borrowers who have more than a 20% downpayment, meaning the relatively low-risk crowd.

Lost on no-one is the fact that this federally backstopped mortgage insurance lightens the financial risk associated with mortgage lending;  the idea is that this makes it easier for some buyers to find houses, and many believe that it helps on the financial stability front. However, the federal backstop, and the existence of CMHC, also lightens the prudential load that otherwise would bear on mortgage lenders. Prudential failures in the U.S. triggered a widespread financial crisis in 2008, and dealing with them has been part of the international financial regulatory agenda ever since.

Hence OSFI’s other recent guideline, B-20, aimed at ensuring that federally regulated financial institution boards understood and oversaw their institutions’ mortgage lending processes, and could explain them – or, know your borrower. B-21 extends the same concepts to the insurers who lift the risk from others – they are expected to know the risks that their lending clientele are selling on to them.

One might think that financial institutions would manage risk as a matter of course, and they do. Nonetheless, the scale of the exposure, and the fact that taxpayers are exposed to it, warrants the regulatory oversight, so long as the market is structured the way it is.

This makes the odd business of telling financial institutions to pursue the basics of risk management seem a normal thing for a regulator to do. Key goals or principles include assessing the mortgage insurer’s internal underwriting systems, models, and processes, and ensuring the “use of effective portfolio risk management.”

What such guidelines cannot do, however, is address the problems associated with the fundamental market structure, meaning that taxpayers directly or indirectly insure mortgage lending. The stability the mechanism might bring is a thing of value, and one that comes with risks and costs. Addressing these will require a long, hard look at market structure, and the role of CMHC. The previous Finance Minister, Jim Flaherty, clearly had expressed his doubts about the current structure; whether Joe Oliver will push on toward market reform, including a smaller or privatized CMHC, is unknown.

Along the way, Minister Oliver will have to address a rather large gap in housing finance risk and its management. That is because federal regulations are federal – meaning that B-20, for instance, does not really cover provincially regulated home lenders, who also sell mortgage risk to insurers.

This matters. Federally regulated chartered banks have perhaps $900-billion in residential mortgage loans outstanding. Next to them, the provincial institutions are small, but the credit unions and caisses populaires still account for about $155-billion in mortgage lending; collectively, that is not small potatoes.

While the lenders are small, their numbers are big, and this is the no-money-down, cash-back mortgage world. And the provincial regulatory system is fragmented, like the market it oversees. For both the regulators and the regulated, risk management and oversight tend to be overtasked and understaffed.

To provide an exit path from this balkanized system, Ottawa has for years offered supportive federal legislation and regulation, a move that would strengthen the system and bring better armed competition to the large banks.

The 2014 federal budget went a step further, ending joint OSFI oversight of provincial credit union centrals. This is intended to light a fire under provincial regulators, or to encourage trustcos to move to federal jurisdiction.

The new OSFI guidelines can be seen as harmless steps, yet there is much left to do. Without the right incentives and oversight in place, taxpayer-backed housing finance will remain an accident waiting to happen.

What you need to know before and after buying a condo!

• TSX +80.20 to 13,772.58 (CP) as a positive forecast on the global economy helped boost oil and metal prices. The World Bank's Global Economics Prospects report said global growth is expected to rise from 2.4 per cent in 2013 to 3.2 per cent this year and 3.4 per cent in 2015.
• Dow +108.06 to 16,481.94 after a strong earnings report from Bank of America and a much better than expected reading on manufacturing in the U.S. Northeast. Also supporting markets was a positive read on the economy by the U.S. Federal Reserve. Its latest regional survey, known as the Beige Book, said the American economy expanded at a moderate pace in December and retail sales gained in most of the 12 Fed districts.
• Dollar +.03 to 91.37US
• Oil +$1.58 to $94.17 US amid data showing a much bigger than expected 7.7-million barrel drop in supplies a
• Gold -$7.10 to $1,238.30 US

Canadian 5 year bond yields markets +.00 to 1.76. The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate published mortgage rate of 3.59) is in the profit range at 1.83. If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.80 and 2.00.


What you need to know before, and after, buying a condo
Rob Carrick The Globe and Mail Jan. 13 2014
Your life as a homeowner will likely include some time in a condo. Condos suit young adults, and retirees who want to downsize. As houses rise in price, more people in between those extremes may opt for condos. Given the strong foundations for condo demand, there are surprisingly few resources available to help people make smart buying decisions.
Into this void comes a new book called The Condo Bible For Canadians: Everything You Must Know Before and After Buying a Condo. (Read an excerpt from the book here.) It’s written by Dan Barnabic, a former Realtor, developer and consumer advocate who now runs a paralegal firm in Toronto. Here’s an edited transcript of a recent conversation I had with Mr. Barnabic about condos.
What accounts for the big rise in popularity of the condo as a place to live?
It’s basically hype fuelled by several forces, many of them developers. The buildings themselves were built much nicer – not better – than ordinary apartment buildings, and they had more amenities. You had swimming pools, you had gyms, you had perks that made you say, why not? As a result, things mushroomed to the point of a deluge of condo towers, especially in Toronto.
Don’t you agree that condos serve a need for some people?
Yes. Condo ownership can be very advantageous for some, including older people who are tired of the hassles of maintaining a house.
What’s the main reason for unhappy condo ownership experiences?
The No. 1 reason is the management of the complex. You can hardly find a condo complex in which the tenants are very happy with the way it’s being run.
What’s the role of the condo board, and how can I make sure they know what they’re doing before I buy?
The condo board is supposed to be in charge of the governance of the complex, making sure that money is being spent properly, that management of the condo is performing its job diligently, that the proper bidding takes place for any repair – stuff like that. You have to find out for yourself if the board is doing its job. Talk to the residents and ask them if they’re happy.
When buying a condo, you suggest starting with a low offer, say 75 per cent of asking. Won’t that just insult the seller?
Is it better to try and get a chance of a better price on a condo, or should you worry about insulting the seller? You’ve got nothing to lose. The worst that will happen is that you’ll be rejected.
Can you explain your warning about buying a condo in a building where more than 25 per cent of units are rented?
If you’re an owner, then it is obvious that you will take care of your condo, that you will not abuse the common elements, that you will look after the amenities.
Tenants simply don’t have the same interest, and you don’t expect them to because they’re not owners.
How can I tell if condo fees in a particular building are reasonable – not kept low to suit the short-term interests of residents, or so high as to work against resale?
You have to basically hit the pavement and compare – go around to other buildings and ask how much people pay and how big their units are.
Special assessments in addition to regular condo fees are a recurring horror story of condo ownership – how can you avoid them?
There’s no such thing as avoiding them. In the first 10 years of a condo, not much happens and it’s unlikely you’d face a special assessment.
After that, the roof is usually good for 10 years and then you have to start patching it up. Elevators start coming into play in 10 years if they’re well made. Outside balconies can become a problem.
There have been reports about leaky condos in Vancouver and falling windows in Toronto – how do you protect yourself against buying a poorly built condo?
The idea is to check on the reputation of the builder. Buying a condo really requires two months’ preparation time to do your due diligence on everything. There are reputable builders, and we have to recognize that. But there are also guys doing things in a hurry to make a buck.
Where do you live?

I am actually renting a very nice apartment on the top floor and not worrying about what expenses the building may incur.

Mortgage Market Commentary for January 3, 2014

• TSX -27.36 to 13,594.19 (CP) started the 2014 trading year in the red in the wake of manufacturing data that indicated the sector is still growing but at a slower pace.
• Dow -135.31 to 16,441.35 as investors stepped back following strong double digit gains in 2013 despite further evidence that U.S. layoffs are low and hiring will likely remain steady. The Labor Department said that the number of Americans seeking unemployment benefits dipped 2,000 last week to a seasonally adjusted 339,000.
• Dollar -.33 to 93.69US as the U.S. dollar gained against other currencies
• Oil -$2.98 to $95.44 US two manufacturing surveys showed Chinese activity slowed in December. A strengthening greenback also depressed prices. That's because a stronger dollar makes commodities such as oil that are priced in dollars more expensive to buyers using other currencies.
• Gold +$22.90 to $1,225.20 US TSX losses were held in check by a sharp uptick in the gold sector as bullion prices rebounded

Canadian 5 year bond yields markets +.01 to 1.93. The yield was 1.80 on Dec 18 and we’ve seen lenders start to increase fixed rates. The spread (obtained by subtracting the bond yield above from the industry average 5 yr rate published mortgage rate of 3.59) is well below the profit range at 1.66. If the increase in bond yield continues upward, the spread shrinks, which could prompt interest rates to rise. The range for investor desired profitability is currently a bit lower in the region of 1.80 and 2.00.

14 ways to slash your expenses in the new year

Teresa Mears | U.S.News & World Report

With the new year approaching, it's time to get your financial house in order.

No matter what mistakes you made in 2013, you get a do-over in 2014. The beginning of the year is a great time to make changes that will boost your bottom line going forward. But before you can make a plan to save money, you have to find out where your money's going. If you use an online budget tool or computer program to track your spending, run some reports and evaluate where your money went. If you don't have any records, write down every penny you spend for a month.

"It's hard to figure out where you're overspending until you know where you're spending," says Jean Chatzky, author of "Money Rules: The Simple Path to Lifelong Security."

Once you've got a record, do some analysis. The first question, obviously, is whether your outgoing funds exceeds your income. If you've got a mountain of credit card debt, and every month you spend more than you take in, you need make some changes.

"This can happen to smart people, to anybody, to responsible people," says Beverly Harzog, author of the new book "Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made." Her problems were caused by overspending when she was young, but others have ended up in debt because of job loss, medical problems or other issues beyond their control. Solving the problem, however, is up to them. "It is your problem and you have to fix it, regardless of how it happened," Harzog says.

Even if your expenses don't exceed your income, drilling down into your spending may reveal places you can painlessly cut costs to have more money for retirement, a home down payment or an exotic vacation.

The best spending plan for you may not be the best plan for your neighbor. We've all heard the cliché about cutting out the morning latte, but that isn't going to work for everyone, especially those who never buy lattes. "If you value that takeout coffee - if it puts a little joy in your day - I don't believe that's what you should cut," Chatzky says.

For some people, cutting out the morning latte won't make a dent. They may have to look at more painful cuts, such as moving to cheaper housing or choosing public rather than private schools. "Sometimes the little trims here and there aren't enough," Chatzky says.

Here are 14 ways to slash expenses in the new year:

Cook more at home. "We eat so frequently on the go these days," Chatzky says. "The evidence is gone before you get home." Anyone who can read can cook, and the Internet is full of websites with easy, healthy recipes.

Save on groceries by shopping store sales and using coupons. It's true that a lot of coupons are for junk food, but that doesn't mean you can't save with coupons, particularly on personal care and cleaning products. Store sales can provide even bigger savings. Many products go on sale every two, three or six months. Watch the sales cycles on products you use, and stock up when prices are lowest.

Look for happy hours and restaurant deals. For many people, drinks and dinner with friends are a big part of socializing. If you don't want to give that up but you want to spend less, find restaurants with 2-for-1 drinks and free or cheap appetizers and make those your dinner. Join restaurant email clubs to get coupons you can use to cut the price of restaurant meals.

Call your cable TV and Internet provider and ask for a better deal. As more users abandon cable and more competitors get into the market, companies want to hang on to customers. That means they're ready to make a deal. You'll get the best deals from the customer retention department, which is where you call to cancel. "The last time I did this, I saved close to $50 a month," says Liz Weston, author of "Deal with Your Debt: Free Yourself from What You Owe."

Investigate cheaper cellphone plans. Many carriers are offering new no-contract and pay-as-you-go plans. If you find a plan you like, and your contract is up, ask your existing carrier if it will match the price or give you a better deal.

Cancel your landline phone. Many people find they rarely make calls on their home phone. If you're not using it, why are you paying for it? Ask about bundling your phone with your cable and Internet service - but be warned that a cable phone will not work in a power failure.

Review your insurance costs. Call your insurance agent and make sure you're getting all the discounts to which you're entitled. Make sure your coverage fits your current circumstances. If your teenage driver moved out and got his own car, get him off your policy. You might also want to get quotes from other companies on auto or home insurance.

Call your credit card companies and ask for lower rates. Or do balance transfers. Credit is loosening up and card companies are sending more offers. If you get a good offer, call your existing company and see if it will match the new offer. If your credit is good and you make all your payments on time, you're in a good position to negotiate. "All they can do is say no," Harzog says. "Consumers have more power than they know."

If you are in debt, make a plan to pay it off. Paying $200 a month in interest charges is a waste of money that would be better used toward retirement savings, your kids' braces or a trip around the world. Some experts advise paying off the smallest balances first, although Harzog recommends targeting those with the highest interest rates. Either way, start paying off those cards, one at a time. Make the minimum payments on all cards, but target one card at a time and make bigger payments so you can pay it off. When you've paid off one card, go to the next.

Look for a cheaper health club. Are you paying $75 a month for a gym membership you never use? Maybe you should cancel and take up walking, biking or hiking. Perhaps you can get a gym membership that's equally good for half the price at a YMCA or community center. Shop around.

Look at the fees associated with your bank and investment accounts. If you don't have free checking, ask your bank what you can do to get it. If your bank doesn't offer free checking, find one that does. If mutual fund fees or stock account fees are eating into your returns, move your accounts to a discount brokerage, especially if you're not getting personalized advice.

Don't shop for recreation. If you're not in the stores, you won't be tempted to buy. That goes for yard sales and thrift shops, too, Weston says.

Be careful of online purchases. It's easy to shop online in the wee hours of the morning, but that spending can add up. Unsubscribe from email alerts that urge you to spend. Get yourself off stores' online mailing lists and restrict your online shopping to things you really need, when you need them.

Make a budget and stick to it. Give yourself a realistic allowance for discretionary spending and don't spend any more than that. "It sounds quaint," Harzog says, but having a budget works.