Freehold vs Freehold

We’ve noticed a lot of deceptive advertising of properties recently, claiming to be 100% freehold while leaving out some very important details! A true freehold home, with no association, condo or land lease fees means you own the home and the land it sits on. Many municipalities push developers to build higher density housing, more creative ownership options are becoming available. Things to look for are properties that are parcels of tied land. With these homes, you do own the land and the house but there will be common land shared among home owners in the area.  The land is typically managed by a condo corporation (also referred to as an association, or home owner’s association), or, it may be self-managed among the home owners.  With these properties, each home owner contributes monthly towards a fund that is used for ongoing maintenance of the land. These homes may be easily recognizable in a gated community or harder to pick out on smaller streets within a large community, with no distinguishable difference from one house to the next.  In these areas, it could be due to smaller streets that require private services as to why there are additional fees. Make sure you know what you’re buying, do your research and lean on your Realtor for advice. We would be happy to go over more information on these two types of homes with you! Shoot us an email at info@kormendytrott.com or call us directly at 1-800-617-0090.  And don’t forget to subscribe to our YouTube channel

#YOURBUDGET2019

The 2019 Federal Budget has been released and there are some excellent new programs affecting real estate, specifically for first-time buyers. Let’s sum it up for you: SHARED EQUITY MORTGAGE The new Shared Equity Mortgage option, available through the Canadian Mortgage and Housing Corporation (CMHC), is HUGE.  This isn’t for everyone but those who can benefit from it will REALLY benefit from it.  CMHC is providing two options with a 5% and a 10% Shared Equity Mortgage for resale and new construction homes respectively. Here’s how it works: Let’s say you’re buying a $500,000 RESALE property, you have the minimum requirement of five percent down ($25,000) and opt to use the program as a first-time buyer. CMHC will provide an additional five percent, bumping your deposit from $25,000 to $50,000, saving you approximately $120 monthly on the mortgage payments. The loan comes at zero interest (sorta — see how they make money below) and no repayment required until refinancing or selling. HOW THEY MAKE MONEY If you sell 3 years later for $600,000, you owe CMHC the principal amount of the loan ($25,000) plus their proportionate share of equity (appreciation). In the case of the resale home example above– five percent ($100,000 appreciation multiplied by five percent –> $5,000) for a total of $30,000 from the proceeds of your sale, netting you $70,000 before other expenses.  If you did this on a new-construction home it would be the same calculation at 10%. HOW TO QUALIFY How do you qualify?  Your household income must be less than $120,000 and the insured mortgage must be less than four times your total household income.  It’s a little confusing; consult with your accountant or real estate agent for more details. FIRST TIME BUYER RRSP PLAN For 10 years, first-time buyers have been able to withdrawal up to $25,000 of their RRSPs for the purpose of a downpayment on a house.  This loan gets paid back over 15-years, interest and tax-free and if there is a second owner who’s also a first-time buyer, they can also use this program, for a total of up to $50,000.  The 2019 budget has increased the individual limit by $10,000 to $35,000 or $70,000 for couples BROKEN HOUSEHOLDS Another great addition to the first-time Buyer RRSP program is that not only can first-time buyers take advantage of it, couples (married and common-law) going through a separation/divorce will re-qualify for the program for funds withdrawn after 2019.  This is a game changer.  We frequently work with couples going through marital breakdowns and it’s never fun, especially financially.  Having the ability to withdrawal up to $35,000 tax and interest-free from an RRSP at this stage in life will make such a big difference!  The new rules weren’t explicitly clear as to how somebody qualifies, what paperwork must be filed, what stage of the separation or divorce they must be in, what proof need be provided, etc. but we expect more on this soon. Hear more about the 2019 Federal Budget in episode 18 of KT CONFIDENTIAL and make sure you follow the podcast on whichever platform you use.

Builder Upgrades

“What upgrades should I buy through the builder and which should I do after closing?” Congratulations!  You’ve bought your brand-new home, and you’re off to that exciting appointment at the design centre to choose all your upgrades…. Here are our suggestions on what to consider. Getting upgrades through the builder is certainly convenient because everything is done before you move in, and you can include a lot of those costs in your mortgage.  It’s less money out of your pocket, but you often end up paying more money for those conveniences. A couple of examples of this would be pot lights and a backsplash. Pot lights are usually $250 or more through the builder, when you can get this done for about $100 after closing.  Even if you have to pay somebody to repair and repaint the ceiling, you still come out ahead. Doing the backsplash afterwards will save you hundreds of dollars, plus you have a much better selection of tiles as you’re not limited to what the builder has to offer. When deciding which upgrades to do, we recommend choosing ones that would be difficult or simply not feasible to complete after closing.  Items like hardwood stairs and a larger master ensuite would be a great example. You should also take into consideration upgrades that can’t be done afterwards, and how that may impact your resale value down the road. Nine-foot ceilings are a great example– Many new home builders will include it as a standard feature now.  In fact, we have buyers today that will not even consider a home if it doesn’t have it. If you’re in the process of buying a new home, or know of someone else who is, and you’d like help making the decisions on which upgrades to choose, send us a DM on Facebook or Instagram @kormendytrott.