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Thursday, 17 November 2011, 02:14:54 PM
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Mortgage penalties for renewals or dissolutions before your term is up can be extremely costly and unfair. But, there is a way to substantially reduce them or even eliminate them.
We locked-in our 5 year term variable local rate mortgage lenders at a fixed rate in 2006 after two interest rate increases and a third pending. I saw the economic storm front coming and expected the historical pattern of interest rate increases during economic recessions or depressions.
But, this time the Banks themselves were so over-extended that Canada's Central Bank came to their rescue to lend them cheap money which they re-invested in higher paying government bonds. This kept interest rates low from 2007 to the present as Banks have gradually increased their capital from the "illegal" 3% lows to close to 9% to-day.
This "Rule Change" left us with a very expensive interest rate that was locked-in for five years. In the past, any changes to my mortgage usually carried only a 3-month interest penalty. But this time I learned about a small type clause that allowed the Bank to charge me for all the interest they would lose if they gave me a new mortgage.
During the past 4 years the Banks have been swamped with customers who didn't know about these clauses when they signed up. The ones who made the most fuss were given a bit of a break, but most have been gouged if they had to sell their properties and change their mortgages.
Of course, I've made sure that the Governor of the Bank of Canada, the Minister of Finance and the Bank Ombudsman clearly know that the consumer has been exploited and in fact extorted by the Bank mortgage departments. They have not come up with any of my suggested actions to help assuage this financial grab by the Banks.
As more families begin to mature and downsize, it is critical to get the right kind of mortgage as your financial situations and cash-flows undergo significant changes. Long-term mortgages at low interest rates appear great now, but be sure to understand what it will cost if you need to get out of your new mortgage.
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Commercial Property Search
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Home Buying & Selling Information
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| OFFER TO PURCHASE FORM |
BUYING HOME CHECKLIST |
HOME VALUES |
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| Understanding the Offer to Purchase Form is essential once your house hunting expedition is a success! You have found the perfect home, one that satisfies your needs, most of your wants- and best of all, fits your pocketbook. Now comes one of the most important phases of your home-buying experience: making an offer to purchase the home. |
If you are buying a home, then, before you decide on whether this home is your dream home, the following checklist will help you look at prospective homes with a critical eye. We suggest printing this page and putting it on a clipboard. When you find a home that really interests you, mark the features you see and note their general condition on this list. |
Home value sometimes referred to as "Value in Use", is best described as the probable price at which a home trades in a free, competitive, and open market and is synonymous with the market value. |
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| SELLING A HOME CAPITAL GAINS TAX |
STAGING… FOR A FASTER SALE AND HIGHER PRICE |
OFFERS AND NEGOTIATIONS |
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| The Income Tax Act does not specifically set out whether or not a gain or loss is capital in nature. The taxpayer is responsible for reporting the gain as income or capital gain. This report may then be challenged by the Canada Customs and Revenue Agency with the onus of proof on the taxpayer. |
There are many television shows today that focus on home staging. If you have not watched any, do yourself a favor and tune in. They all say the same thing: do not even consider putting your house on the market until you have taken a close look at its condition. Experienced sales people know that you only have one shot at impressing potential buyers, so take some time to prepare your home for showings. You will be rewarded with a faster sale and a higher offer. |
Whether buying or selling a home, one activity will be part of the process in all cases and for all involved. Let’s look at the offer to purchase contract and negotiation process from both sides |
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Jim Reid
Broker, ICI, ABR
Royal LePage Your Community Realty, Brokerage |
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