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Atrina Kouroshnia offers her essential guide to help you navigate the basics of lending requirements, down payments, loans and qualification in our new mortgage landscape

Atrina Kouroshnia
REW

I was at my office the other day when a current home owner walked in off the street in a panic. A developer had proposed to buy out the building in order to redevelop, but she was worried; if they didn’t get market value, it would be difficult for her to get into another home. With no mortgage on her current property, she was terrified at the thought of having to move out and start all over under the new mortgage regulations. Would she even qualify, she wondered? And if not, where would she go?

This was one of many clients who have contacted me recently with similar questions. While there has been a lot of media coverage on the changes, every situation is unique and raises different possibilities.

This FAQ sheet is meant to give you some straightforward, honest advice about what the recent changes are, how to deal with them, and what to expect in the upcoming months.

Q: What is the minimum down payment on a home in BC?

A: A minimum down payment for someone who is fully income qualified is five per cent. However, if the purchase price of a property is over $500K, a minimum down payment of five per cent on the first $500K is required. After that, you will be required to come up with 10 per cent on the remaining amount. For example: The down payment for a property valued at $600K would be five per cent of $500K ($25K) plus 10 per cent of the additional $100K ($10K). Total minimum down payment required: $35K. But remember that this amount can change at any time, and has the potential to increase to a 10% down payment if the rules change.

If you’re looking for further clarification, I put together a “Cliff’s Notes” for down payments last month you might find helpful.

Those who are self-employed with stated income are looking at a minimum of 10 per cent down payment no matter what the sale price. Anyone with poor credit or non-verifiable source of income will be looking at alternative lending sources and around 25 per cent at minimum for a down payment.

Q: Where can my down payment come from?

A: In addition to your own savings or other funding sources such as inheritance, if you are employed, you are allowed to have 100 per cent of the down payment gifted from family.

Another option for first-time homebuyers is the Home Buyer’s Plan, through which they can use some of their RRSP towards a down payment. Remember, too, that first-time buyers have a property transfer tax (PTT) exemption up to a home value of $475K, and a PTT discount up to $500K, so you will not have that capital expense at the outset. For all buyers, a new property up to a purchase price of $750K would be exempt from PTT as long as it is owner-occupied, plus there are a number of rebates available to new homeowners.

If you are self-employed and you choose to state your income, at least half of the 10 per cent down will need to come from your own source. You will need to have been in business for at least two years, or beyond that, be able to show a two-year average of NOA income and two years of taxes filed as a business for ‘self’ for any “A” type of mortgage.

However, if you have been in business for less than two years, there may still be the possibility to obtain a mortgage from a B lender. If you take this route, you will need one year of bank statements and related documentation. This will include the length of operation, and retained earnings or savings. Your income must also be reasonable for the property you wish to purchase.

Q: What about the new BC government down payment loan program for first-time buyers?

A: The new BC Home Partnership program was introduced on December 15, 2016, to help first time home buyers get into the market. Essentially, it is an interest-free loan from the BC government for first five years. This loan gets registered as a second mortgage on the property and would be due if the property is sold.

Because this is an unconventional form of down payment, the insurance premiums will be higher. A few of the lenders so far have expressed that they will be partaking in this program. The consensus so far is that the insurance premium through one of Canada’s mortgage insurance providers will be bonused by 0.25 per cent.

It is important to note that because this is a loan, the lender will calculate a repayment amount and include it in your liabilities. So far the lenders that have updated us will be using the higher of the benchmark rate, which is currently 4.64 per cent or the contract rate amortized over 20 years.

To give you an idea of what this number looks like, depending on the total down payment and the insurance premium, the lender would consider $65-67 per every $10,000 that you are borrowing on this program, even though you are not actually making any payments. If you max out the loan, and borrow the full $37,500 offered by the program, your lender would calculate a repayment amount of approximately $250 per month. In effect, this could reduce the actual mortgage you can borrow by over $50,000.

When you work out the numbers, not everyone would benefit from this program. An ideal candidate for this program would be someone with a good income, very little debt if any, and someone who is purchasing well below their approved limit. When we calculate the repayment of the loan, the total mortgage amount and hence purchase price gets reduced.

If you are interested in participating in this program, allow yourself ample as with any new program, the kinks would take a while to get worked out. Make sure you are pre-approved and you have discussed your options with your mortgage broker to see if you would benefit.  Lastly, avoid making subject-free offers based on the assumption that your application would get approved.

Q: What is the maximum amortization on a mortgage?

A: The maximum amortization on an insured or insurable mortgage is 25 years, while on a non-insured or non-insurable mortgage it is 30 years.

Q: Can I get a mortgage if I’m here on a work visa?

A: If you are living in BC on a work visa, you will pay 10 per cent down on an insured mortgage. On a non-insured mortgage you will pay 35 per cent down. And you will still be required to pay the new foreign buyer’s tax of 15 per cent additional PTT.

Q: How much of the rental income can I use to qualify for a mortgage on a home with a suite?

A: Generally speaking, you can expect 50 per cent of your rental property investment back. By this I mean that you will take 100 per cent of the income minus expenses, and add 50 per cent of that to your total income for qualification purposes. It is possible to use a rental worksheet, which can make the numbers more attractive, but this is usually the case with most lenders. However, some will use an 80 per cent “rental offset” system that will help you qualify for more on the basis of your rental income, so shop around and ask questions. 

Q: What is the difference with a monoline lender?

A: Even monoline lenders do not bulk insure everything. Now that November has come and gone and the new changes are underway, we are clearer on the look of things to come but there will be some suits yet to press.

Though monoline lenders usually bulk-insure their files, it now depends on where the lender is obtaining their funding from. While they may not need to bulk-insure, most have confirmed that they will continue to offer 30 years’ amortization and qualifying on the contract rate if the client has a five-year fixed rate. However, because these files are no longer seen as highly insurable clients, the rates will likely increase about 10-15 basis points for a longer amortization and/or will use the contract rate to qualify.

A good example is TD bank, which – although a major national lender that does not bulk-insure as much as a monoline lender – has added a premium for its longer amortization. RBC has also joined the game and is now charging higher rates for any amortization over 25 years.

Q: Why is it important to speak with a mortgage broker?

A: In light of the recent changes to the mortgage requirements in BC, speaking with a mortgage broker is really in your best interest. Unlike in the past, many lenders are no longer lending for rentals nor refinancing. Not only that, they are no longer allowing a refinance as capital towards paying down a debt.

If you want a longer amortization or if your mortgage is not insurable, simply speaking, you need to be willing to pay for it. In the end, those hurt the most by these changes will probably be first time homebuyers more than anyone else.

For an overview of the five essential documents you will need to secure a mortgage, complete with examples, feel free to visit my latest web post here.

© 2016 Real Estate Weekly

Across province and country as a whole, last year was the hottest ever for residential sales and prices, say real estate associations

Joannah Connolly
REW

Last year was a record 12 months for real estate sales across the province, despite a slow second half in the Greater Vancouver area preventing that region from breaking its own sales record, according to British Columbia Real Estate Association (BCREA) statistics released January 13. 

A new high of 112,209 homes were sold in BC in 2016, up 9.5 per cent from 2015. The average sale price also set a new record, up 8.6 per cent year over year to $691,144.

This combination of record sales and prices inevitably created a major boost to sales dollar volume, with a record-breaking total of $77.6 billion spent on residential BC real estate in 2016, a jump of 18.8 per cent over 2015’s record.

“Broad-based consumer demand driven by strong economic conditions, employment growth, consumer confidence, and an expanding population base pushed home sales to record levels in many BC regions last year,” said Cameron Muir, BCREA’s chief economist. “However, home sales have fallen back from their lofty peaks early last year.”

Indeed, December home sales across BC fell 28.4 per cent year-over-year to 4,721 units – a seasonal drop of 26.5 per cent month over month. Total sales dollar volume was $3.1 billion last month, a fall of 33.1 per cent compared with the same month the previous year.

The average BC MLS® residential price in December was $654,699, which is a 6.6 per cent drop from December 2015 but a rise of 4.6 per cent compared with November 2016, as sale prices across the province continued their recovery since August’s dip.

In terms of individual real estate boards across BC, the strongest performers in December were Kootenay, Kamloops and Okanagan Mainline, which all saw year-over-year increases in home sales and average prices, while Greater Vancouver saw the biggest annual sales decline.

National Picture

Across the whole country, it was a similar story, according to figures released January 16 by the Canadian Real Estate Association (CREA).

Canadian home sales for the whole of 2016 hit a new record of 536,118 units, increasing by 6.3 per cent compared with 2015. The CREA said that is was driven by strong sales activity in the first half of the year that has “softened” since.

“Sales set a new annual record last year,” said Cliff Iverson, CREA president. “However, tightened mortgage regulations are expected to contribute to lower sales activity this year, though the extent to which they will weigh on housing markets across Canada will vary.”

The average sale price in Canada in 2016 was $490,495, a rise of 10.7 per cent compared with 2015’s average price. Total residential resale dollar volume in Canada last year was just shy of $263 billion, up 17.7 per cent from 2015.

Actual home sales in December 2016 across the country totalled 25,865 units, a five per cent drop year over year but a rise of 2.2 per cent compared with the weak nationwide sales of November 2016.

In December, the Canadian average home sale price was $470,661, up 3.5 per cent year over year – but the MLS® Home Price Index rose 14.2 per cent on an annual basis to $582,000.

The CREA hinted that it expected to see fewer home sales across the country this year. Gregory Klump, CREA’s chief economist, said, “Home sales are unlikely to benefit the Canadian economy as much in 2017 as they did in 2016. New regulations mean that in order to qualify for a mortgage, home buyers will either have to save longer for a bigger down payment or purchase a lower priced home. In urban centres where the latter are in short supply, that’s likely to translate into fewer sales.”

© 2016 Real Estate Weekly

Time for us all to pitch in ? the poor people of Shaughnessy need shovels

Wayne Moriarty
The Province

With the exception of a lost weekend that lasted five years, I have been an avid runner since 1974.

I bring this to your attention for the purpose of presenting my credentials as someone well acquainted with the sidewalks of Vancouver.

Over the decades, I’ve run in West Point Grey, Dunbar, Killarney, Strathcona, the West End, Yaletown, Cole Harbour, East Hastings, Riley Park and pretty much every other neighbourhood in this magnificent city of ours.

My favourite place to run, when Stanley Park is too far or too crowded, is Shaughnessy.

The first time I ever ran through Shaughnessy was on a bright and sunny day some 40 years ago. I imagined, so perfect was this place, it didn’t rain here; instead, the beautiful trees, flowers and shrubs, many of them secured behind imposing walls, were kept vibrant and lush by the dew and the dew only.

I said “imagined,” as, of course, yes, it rains in Shaughnessy.

t snows, too.

Which brings me to the point of this column: In this most wintry of winters, why is it the residents of Vancouver’s toniest neighbourhood have appeared, for the most part, wilfully incapable of clearing the snow and ice from the public sidewalks outside their respective homes?

I understand many of you don’t get to Shaughnessy all that often, so you are going to have to trust me on this one: I can state with a degree of certainty that 80 per cent of the sidewalks here remained unattended throughout this past month of highly inclement weather.

After a lengthy deliberation of — I don’t know — three minutes, I concluded there can only be two explanations for this behaviour.

One is that nobody lives here. Now, the part of me that feels there is too much foreign ownership in this city considers this a distinct possibility. But the part of me that is sane, knows it isn’t — a possibility, that is.

The other explanation owes its conclusion to the deductive wisdom of Sherlock Holmes, who, as a Moriarty, I know all too well: “Once you have eliminated the impossible, whatever remains, however improbable, must be the truth.”

With that said, I’ve concluded the residents of Shaughnessy are unaware of how to purchase a shovel.

Time to act, folks!

Based on extensive research that involved slightly more than 30 seconds of reading Wikipedia, I determined the population of Shaughnessy to be approximately 10,000. With a working average of four people per household, that would mean 2,500 shovels are needed before the next snow arrives.

I went to Home Depot’s website. An 18-inch ergonomic snow shovel runs approximately 33 bucks. Given I’m looking at purchasing 2,500 of these beauties, I figured I could get the cost down to $30 per unit, or $75,000 all in.

I consider myself a generous man, but $75,000 is simply outside my shovel budget, so I’m proposing a GoFundMe campaign. It’s a natural. My God, it even has alliteration on its side: “Shovels for Shaughnessy.”

We need to act quickly. While there is no snow in the 10-day forecast, according to the Farmer’s Almanac, February will see the return of flurries.

Finally, if I haven’t fully convinced you of the need to donate, allow me one more point to pull on your heart: If the sidewalks of Shaughnessy are not routinely cleared in the most prudent and efficient of manners this winter, where are the cyclists going to ride?

© 2017 Postmedia Network Inc.

Lower Lonsdale project a short SeaBus ride from downtown

Simon Briault
The Vancouver Sun

 

Promenade at the Quay

Project location: 118 Carrie Cates Court, North Vancouver

Project size: 117 homes. The 844-to-1,290-square-foot homes still available have either two or three bedrooms and are priced between $718,000 and $2,388,000

Developer: Polygon Promenade at The Quay Homes Ltd.

Architect: Nigel Baldwin and DYS Architecture

Interior designer: Polygon Interior Design Ltd.

Sales centre: 21 Lonsdale Ave, North Vancouver

Hours: noon — 5 p.m., Sat — Thurs

Telephone: 604-986-8862

Website: polyhomes.com

Occupancy: Spring 2019

If you want to live in a buzzing community that’s within easy reach of downtown Vancouver and is stuffed full of local character, amenities, shops and restaurants, you’d be hard pressed to find anywhere better than Lower Lonsdale.

Goldie Alam, Polygon’s senior vice-president of marketing certainly thinks so. She said it is the unparalleled location that has made selling homes in the company’s Promenade at the Quay development so easy.

“We started sales in September and it’s been a great success,” she said. “It’s been very popular with people primarily from the North Shore who understand just what a great location it is. It really can’t be beat; it’s amazing down there – you’re right at the heart of it all.”

Sure enough, Douglas and Donna Thompson, who have bought a two-bedroom penthouse suite at Promenade, say that the location was a key factor in their decision.

“It’s right near the water and that had a lot of appeal,” said Douglas Thompson. “We’ll be able to walk across the street, get on the Seabus and be downtown in 15 minutes. The amenities are all pretty much right there too, so we won’t have to drive any more.”

In what must be a first for a residential building in Vancouver, the second floor of Promenade will house a museum. Visitors to the North Vancouver Museum and Archives will be able to participate in community events, activities and educational programs, and enjoy regularly changing exhibits. Exhibition spaces include a group of theme-based core exhibits and a gallery devoted to changing exhibits on topics of local interest.

Meanwhile, the ground floor of the Promenade building will consist of restaurants and retail with easy pedestrian connections to the waterfront and the North Shore Spirit Trail, a fully accessible greenway that will extend from Horseshoe Bay all the way to Deep Cove.

“The Polygon Gallery, which will show mainly photography exhibits, is under construction right across the street from us and we’re also very close to the shipyards area that is all being redeveloped by the City of North Vancouver,” added Alam. “Then there’s the night market during the summer, Lonsdale Quay market year round, Tap and Barrel and all the other restaurants and amenities in the neighbourhood.”

Promenade at the Quay’s 117 homes will all be fully air conditioned. They’ll all have private outdoor spaces, premium engineered wood flooring in living spaces and wool carpeting in the bedrooms.

Kitchens feature stone countertops with waterfall edges and full-height marble tile backsplashes. Appliance packages include five-burner cooktops, electric wall ovens, built-in speed ovens with microwave capabilities and counter-depth refrigerators. Every kitchen features soft-close cabinetry and drawers, a built-in cutlery drawer and pull-out pantry shelves. There are also USB electrical outlets, as well as dual roll-out recycling stations.

Master ensuite bathrooms include imported marble floor tiles and floating cabinets. There are European-style thermostatic shower systems featuring marble wall tiles, ceiling rain head showers with hand-held wands, built-in niches for toiletries and integrated bench seating. Custom details include modern vanities with extra accent lighting, square under-mount washbasins, and imported engineered stone countertops with matching stone backsplashes.

Alam said that downsizers have been especially attracted to the larger homes at the front of the building because they will have beautiful views – west to Lions Gate Bridge and Stanley Park and south to downtown Vancouver.

“For example, our G plan is a three-bedroom, two-bathroom home that has been oriented to take full advantage of the view, with a huge open-plan living and kitchen area, a large kitchen island, a wine bar and a pantry,” she said. “There’s also lots of storage space and a side-by-side washer and dryer, which downsizers definitely appreciate.”

“We have lived in North Vancouver for more than 40 years, so now we’re thinking about our future, leaving the single-family home and getting into a place where we don’t have to worry about maintenance and upkeep,” Thompson said. “We have view property in Upper Lonsdale, so we knew we wanted to have a view in the new place. We originally approached Polygon on another project they had down on Esplanade. It wasn’t for us and it was sold out, but they told us about Promenade so we got ourselves on the shortlist.”

Polygon still has a limited number of homes for sale at Promenade at the Quay. The 844-to-1,290-square-foot homes still available have either two or three bedrooms and are priced between $718,000 and $2,388,000.

“The great thing about this development is that when Promenade is ready to go, there will be a whole bunch of new amenities completed at the same time,” Alam said. “We have had some first-time buyers and move-up buyers who work downtown and love the idea of such an easy commute and still being at the heart of the action.”

© 2017 Postmedia Network Inc.

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Justin da Rosa
Mortgage Broker News

British Columbia enjoyed record real estate sales in 2016, with 112,209 total residential homes sold – an increase of 9.5% year-over-year.

“Broad-based consumer demand driven by strong economic conditions, employment growth, consumer confidence, and an expanding population base pushed home sales to record levels in many BC regions last year,” Cameron Muir, BCREA Chief Economist, said.
“However, home sales have fallen back from their lofty peaks early last year.”

Total sales dollar volume increased 18.8% year-over-year to $77.6 billion and the average price jumped 8.6% to $691,144.

“A total of 4,721 residential unit sales were recorded by the MLS in December, down 28.4 per cent from the same month last year,” the British Columbia Real Estate Association said in a release. “Total sales dollar volume was $3.1 billion last month, a decline of 33.1 per cent compared to the same month the previous year.

“The average MLS residential price in the province was $654,699 in December, a 6.6 per cent decline from December 2015.”

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Ephraim Vecina
REP

 

Healthy inbound migration is predicted to play a major role in the gradual upward climb of Victoria home prices this year, according to the province’s outgoing real estate board chief.

“There’s more buyer demand than we can supply right now,” Mike Nugent said on Monday (January 9), as reported by the Toronto Star.

“In Victoria, because we’ve got so few places available — all our projects are sold out — and because of the shortage of inventory even though sales will be less, we expect prices to continue to keep inching up.”

Migrants from other parts of the country are taking advantage of Victoria’s strong fundamentals, the official added. In particular, baby boomers from Vancouver are trading their B.C. properties for similar (or even larger) homes that can be acquired for much less.

“Our economy is one of the best in the country right now,” Nugent explained. “We’ve got lots of jobs happening in all sectors. That’s attracting everybody.”

However, contrary to initial predictions, the Victoria real estate segment has yet to experience a surge of overseas capital following the implementation of a 15 per cent foreign buyer’s tax in B.C. in mid-2016.

“There’s certainly no evidence so far of showing a big shift of foreign buyers to Victoria,” Nugent said.

Copyright © 2017 Key Media Pty Ltd