Many Canadian homeowners are putting compound interest in its place by accelerating their mortgage payments, potentially knocking years off their repayment schedules.
A report issued in November by the Canadian Association of Ac-credited Mortgage Professionals (CAAMP) indicates that about 36 per cent of 5.8 million mortgage holders accelerated their mort-gage payments during the previous year. That includes 16 per cent who increased their monthly payments, 17 per cent who made lump sum payments and five per cent who increased the frequency of their payments.
About six per cent of mortgage holders used more than one of these approaches to whittle their mortgages down.
"It's the most recent buyers - those who purchased from 2006 and 2011 - who are making the most additional efforts to speed up the repayment of their mort-gages," says Jim Murphy, president and CEO of CAAMP.
Reduction efforts made early in the history of the mortgage will have far greater effect than those made closer to the end.
A case in point: a property owner with a $200,000 mortgage amortized over 30 years at four per cent interest can pay off that mortgage four years sooner simply by switching from monthly to bi-weekly payments.
Murphy notes, however, that not all mortgages are created equal.
"Most mortgages will let you pay down 20 per cent of the principal on an annual basis without a penalty, which is great if you expect a windfall of cash that can be applied to the mortgage," he says.
"Some of the newer mortgage packages offer a low interest rate, but also limit lump sum payments to 10 per cent of the principal. Be careful of the mortgage features you choose and make sure they offer the best features for your circumstances."
With the days of double-digit interest rates relegated to the past, the focus of many mortgage holders has been on faster repayment and mortgage flexibility, says David Stafford, managing director, real estate secured lending, at Scotiabank.
"Canadians are really creative at paying down their mortgages, and with the advent of online mortgage calculator tools, it's be-come easy to see how even small efforts can accelerate mortgage freedom," he says.
While some property owners are simply using bonuses or tax refunds to pay down mortgage principal, or keeping their payments the same if interest rates drop, others are attacking their mortgages with death by a thou-sand cuts.
"You can lop 10 years off your mortgage without breaking a sweat," says Stafford.
"Some people are going on-line and rounding off the pocket change they see after the decimal place every chance they get, or rounding their mortgages down to the nearest $10 or $100 increments. Others are increasing their monthly payments by $10 for each year of the mortgage. It's all part of chipping away at the base of that mountain."
Why would a bank want borrowers to be mortgage-free faster?
"When you pay down your mortgage faster, you're building up equity," says Stafford. "If you've paid down that mortgage in 15 years instead of 29 we can move you to the next stage sooner, where you're examining your balance sheet and making it work for you by looking at the investment side."
Wednesday 28 March 2012
Monday 26 March 2012
Canada’s real estate market to cool, not crash
The banks have two pieces of good news for Canadian homeowners — real estate prices are expected to cool, not crash, and home ownership is becoming slightly more affordable.
Canada’s housing market is losing some of its “exuberance,” but fears of a bubble are over inflated, unless there is the unlikely situation where jobless rates suddenly soar along with interest rates, Scotiabank Senior Economist and Real Estate Specialist Adrienne Warren told a Toronto audience Wednesday.
In fact, a softening of house prices in the final half of 2011, along with income gains, helped offset record high debt levels, making home ownership slightly more affordable even in the notoriously expensive Vancouver market, according to new research from the Royal Bank.
“The improvement in affordability was a welcome reprieve for Ontario homebuyers as it helped reverse some of the notable deterioration that gripped the province in the first half of last year,” said RBC senior economist Robert Hogue in a release Wednesday.
But affordability remains “slightly strained” in the Toronto market where demand continues to outstrip supply.
“Conditions in the Toronto area still slightly favour sellers, which will make further improvements in affordability difficult in the near-term,” said Hogue.
The benchmark detached bungalow ate up about 52.2 per cent of pre-tax household income in Toronto in the fourth quarter of 2011, down 0.1 percentage points from the previous quarter. In Vancouver, where the same house accounts for a whopping 86 per cent of pre-tax income, the drop was 4.6 per centage points, RBC says.
Scotiabank noted Wednesday that high prices, tighter lending controls and slowing job growth contributed to a levelling off of Canada’s hot housing market in the second half of last year.
“We expect sales and prices will be relatively flat in the year ahead,” Scotiabank’s Warren told the meeting of investors, housing experts and city planners.
The two reports come just days after Finance Minister Jim Flaherty once again expressed alarm about historic levels of household debt, now at a record high 153 per cent of disposable income.
“I again encourage Canadians to be careful in the amount of debt they take on in terms of residential mortgages because (interest) rates will go up someday,” he said, expressing particular concern about the condo booms in Toronto and Vancouver.
Warren acknowledged that the Canadian housing market may be 10 or 15 per cent overvalued and that the condo market may be due for a slowdown, partly because units are getting so expensive, they may no longer make sound economic sense for the investors who have been helping fuel the condo boom.
But condo construction will continue to far outstrip the construction of single family homes, she noted, largely because they cost an average of $200,000 less than a house, making them desirable for new immigrants, young professionals and first-time buyers.
Toronto is moving toward a buyers market, just like Vancouver where bidding wars are largely a thing of the past, Warren noted.
In fact, the really hot housing story is now in the western provinces of British Columbia, Alberta and Saskatchewan where strong job growth in the resource sectors has driven up employment, wages and, with them, higher demand and house prices.
Canada’s housing market remains “in fundamentally better shape” than most other international markets where economic and political uncertainty, high unemployment and worried consumers have deflated demand and prices.
Canada’s housing market is losing some of its “exuberance,” but fears of a bubble are over inflated, unless there is the unlikely situation where jobless rates suddenly soar along with interest rates, Scotiabank Senior Economist and Real Estate Specialist Adrienne Warren told a Toronto audience Wednesday.
In fact, a softening of house prices in the final half of 2011, along with income gains, helped offset record high debt levels, making home ownership slightly more affordable even in the notoriously expensive Vancouver market, according to new research from the Royal Bank.
“The improvement in affordability was a welcome reprieve for Ontario homebuyers as it helped reverse some of the notable deterioration that gripped the province in the first half of last year,” said RBC senior economist Robert Hogue in a release Wednesday.
But affordability remains “slightly strained” in the Toronto market where demand continues to outstrip supply.
“Conditions in the Toronto area still slightly favour sellers, which will make further improvements in affordability difficult in the near-term,” said Hogue.
The benchmark detached bungalow ate up about 52.2 per cent of pre-tax household income in Toronto in the fourth quarter of 2011, down 0.1 percentage points from the previous quarter. In Vancouver, where the same house accounts for a whopping 86 per cent of pre-tax income, the drop was 4.6 per centage points, RBC says.
Scotiabank noted Wednesday that high prices, tighter lending controls and slowing job growth contributed to a levelling off of Canada’s hot housing market in the second half of last year.
“We expect sales and prices will be relatively flat in the year ahead,” Scotiabank’s Warren told the meeting of investors, housing experts and city planners.
The two reports come just days after Finance Minister Jim Flaherty once again expressed alarm about historic levels of household debt, now at a record high 153 per cent of disposable income.
“I again encourage Canadians to be careful in the amount of debt they take on in terms of residential mortgages because (interest) rates will go up someday,” he said, expressing particular concern about the condo booms in Toronto and Vancouver.
Warren acknowledged that the Canadian housing market may be 10 or 15 per cent overvalued and that the condo market may be due for a slowdown, partly because units are getting so expensive, they may no longer make sound economic sense for the investors who have been helping fuel the condo boom.
But condo construction will continue to far outstrip the construction of single family homes, she noted, largely because they cost an average of $200,000 less than a house, making them desirable for new immigrants, young professionals and first-time buyers.
Toronto is moving toward a buyers market, just like Vancouver where bidding wars are largely a thing of the past, Warren noted.
In fact, the really hot housing story is now in the western provinces of British Columbia, Alberta and Saskatchewan where strong job growth in the resource sectors has driven up employment, wages and, with them, higher demand and house prices.
Canada’s housing market remains “in fundamentally better shape” than most other international markets where economic and political uncertainty, high unemployment and worried consumers have deflated demand and prices.
Saturday 24 March 2012
Real Estate Investor Shares Vision For Meaford
Real estate investor Lino Toncic was the featured speaker at a breakfast hosted by the Meaford & District Chamber of Commerce at Meaford Hall Friday morning.
Toncic shared his vision of what Meaford could become through careful, well planned development in the municipality, particularly in the downtown core.
Before sharing his vision, Toncic told the audience of 80 local business owners, council members, and residents that he wanted to address some assumptions that have been made by some in the community in recent months about his intentions for the properties he has purchased in Meaford.
“I am not a developer, I am a resident who wants to make things better,” said Toncic who is based in Oakville, but owns a cottage in Meaford, “Unless you hear me say something, do not believe it.”
Toncic said that he has heard many stories about what he intends to do with the properties he has purchased in Meaford, but he says that thus far, he has no plans, no designs, and no concrete decisions have been made with respect to those properties which include the site of the former Reed's Restaurant, the former Canadian Tire property, as well as a number of other downtown commercial properties.
While he had no designs to share with the audience, Toncic said that he does have a vision for Meaford, and he wants to move forward in an open and transparent manner by including municipal and public input into any projects that do come to fruition.
“I have a vision for Meaford, I have a vision for what Meaford could become,” offered Toncic.
He said that the municipality has some key features that are attractive when considering investing in, and drawing new projects to the community.
He expressed positive thoughts about Meaford's waterfront location, amenities such as the hospital, and the residents in general. He also identified some weaknesses that need to be overcome if Meaford is to blossom into a destination that will draw both tourists and investors.
Toncic feels that development of a quality hotel would go a long way toward moving Meaford from a nice place to stop for a day-trip, into a destination that would hold those tourists in the community longer, and ultimately to spend more of their valuable dollars at local business establishments.
He has researched plans and ideas that have been put forward in previous studies that have been conducted, and he says that many of those plans were on the right track, but perhaps were ahead of their time.
“Everyone has to benefit from this, and everyone has to contribute,” said Toncic adding that if there isn't an opportunity for the community as a whole to generate more revenue, then any potential developments will experience difficulty, “We need to create a win, win, win.”
Toncic said that the community has to be a better place than before he arrived in the municipality.
While he has no interest in bringing box stores, or major retailers like Wal Mart to Meaford, he does see Meaford following in the footsteps of communities such as Niagara on the Lake which have preserved their heritage while at the same time creating opportunities for profit and investment.
“You guys have the template, let's work with it,” said Toncic, “I believe that the best businesses are the ones that are run by the local people, because they have an understanding, they know what has to be done, and they want to get ahead. But if those roles aren't filled by the local businesses, guess what? It's the outside people will fill those roles.”
And Toncic would prefer to see local business owners, and potential entrepreneurs work together to build a community that they can all be proud of. And while that doesn't mean that some older structures won't have to come down, he assured the audience that his vision would preserve the essence and heritage of the community as much as possible.
“The focus should also contain an emphasis on economic sustainability on year-round business opportunities. You can't just live off tourism. You guys have got to be able to sustain business on a year round basis.”
Toncic shared his vision of what Meaford could become through careful, well planned development in the municipality, particularly in the downtown core.
Before sharing his vision, Toncic told the audience of 80 local business owners, council members, and residents that he wanted to address some assumptions that have been made by some in the community in recent months about his intentions for the properties he has purchased in Meaford.
“I am not a developer, I am a resident who wants to make things better,” said Toncic who is based in Oakville, but owns a cottage in Meaford, “Unless you hear me say something, do not believe it.”
Toncic said that he has heard many stories about what he intends to do with the properties he has purchased in Meaford, but he says that thus far, he has no plans, no designs, and no concrete decisions have been made with respect to those properties which include the site of the former Reed's Restaurant, the former Canadian Tire property, as well as a number of other downtown commercial properties.
While he had no designs to share with the audience, Toncic said that he does have a vision for Meaford, and he wants to move forward in an open and transparent manner by including municipal and public input into any projects that do come to fruition.
“I have a vision for Meaford, I have a vision for what Meaford could become,” offered Toncic.
He said that the municipality has some key features that are attractive when considering investing in, and drawing new projects to the community.
He expressed positive thoughts about Meaford's waterfront location, amenities such as the hospital, and the residents in general. He also identified some weaknesses that need to be overcome if Meaford is to blossom into a destination that will draw both tourists and investors.
Toncic feels that development of a quality hotel would go a long way toward moving Meaford from a nice place to stop for a day-trip, into a destination that would hold those tourists in the community longer, and ultimately to spend more of their valuable dollars at local business establishments.
He has researched plans and ideas that have been put forward in previous studies that have been conducted, and he says that many of those plans were on the right track, but perhaps were ahead of their time.
“Everyone has to benefit from this, and everyone has to contribute,” said Toncic adding that if there isn't an opportunity for the community as a whole to generate more revenue, then any potential developments will experience difficulty, “We need to create a win, win, win.”
Toncic said that the community has to be a better place than before he arrived in the municipality.
While he has no interest in bringing box stores, or major retailers like Wal Mart to Meaford, he does see Meaford following in the footsteps of communities such as Niagara on the Lake which have preserved their heritage while at the same time creating opportunities for profit and investment.
“You guys have the template, let's work with it,” said Toncic, “I believe that the best businesses are the ones that are run by the local people, because they have an understanding, they know what has to be done, and they want to get ahead. But if those roles aren't filled by the local businesses, guess what? It's the outside people will fill those roles.”
And Toncic would prefer to see local business owners, and potential entrepreneurs work together to build a community that they can all be proud of. And while that doesn't mean that some older structures won't have to come down, he assured the audience that his vision would preserve the essence and heritage of the community as much as possible.
“The focus should also contain an emphasis on economic sustainability on year-round business opportunities. You can't just live off tourism. You guys have got to be able to sustain business on a year round basis.”
Thursday 22 March 2012
Five reasons home sale in Oakville, Canada
If you are looking for homes for sale in Oakville, Ontario, you've no doubt discovered that real estate is rarely on the market for a long time. In fact, no matter where you look in town, new homes and renovated older houses are often sold within days or weeks of being listed. The area is near the Metro Toronto still gives homeowners a small town feeling that is welcoming and warm. How are you trying to Oakville, Ontario Real Estate, keep in mind some of the reasons why homes are selling quickly, then make your move to buy an excellent home for your family.
1. For Families
School systems in the area have exceptional educational resources and focus on individual development of each child. Award-winning programs, excellent school libraries, computer labs and dedicated teachers combine to offer your children the opportunity to develop and excel.
There are a variety of resources of other family and friends, including a regional hospital dedicated to improving the health of residents and the public library, where residents are not only recently published books and periodicals, but the summer programs for children all ages.
2. Educational opportunities
The Oakville Centre for the Performing Arts is an award-winning site that hosts everything from the original games and musical performances to comedians and variety acts. You will be able to enjoy an evening of great talent, without having to drive in downtown Toronto. Downtown restaurants and clubs offering everything from French cuisine to late night clubbing.
Annual events such as Days of Bronte Harbour and Jazz Festival draw talented performers and artists from around the world. If you love beautiful architecture, many houses for sale in Oakville have been beautifully restored to their original condition. If contemporary is your dream, there are a lot of Oakville new homes designed and built by local companies that focus on quality, beauty and sustainability.
3. The Great Outdoors Invite
When looking at Oakville, Ontario Real Estate, be sure to take in a natural environment. The great outdoors is an integral part of life. Many Oakville new homes are constructed to take maximum advantage of the many natural wonders of the area.
With over 2,400 acres of parks and open spaces, the city offers cycling and trekking, golf courses, nature trails and many other outdoor recreational opportunities. The seafront has two ports for boaters and lovers of water sports and golf is a favorite activity for many people buying homes for sale in Oakville.
4. A business Segment Strong
In Oakville, new homes are always under construction, in order to meet the
the demand for young urban professionals. Since this area is a hub for industries ranging from life sciences to emerging technologies, is also a center of research and learning that provides opportunities for growth and new job opportunities. Over 260 national and international locations for businesses of all sizes and a focus on new and emerging technologies mean homes for sale in Oakville are often purchased by professionals from industries cutting edge.
5. Environmental Responsibility
Newer homes are built by some of the best employers in the residential sector, with a focus on sustainability and the maintenance of minimum ecological impact on the planet. The city has implemented green initiatives through a comprehensive environmental strategy.
Programs like a Blue W, which offers free refills of tap water throughout the city, the initiative Towards Zero Waste, green building and LEED certified by independent contractors, so you'll be proud of your Oakville, Ontario Real Estate for sustainability, as well as its beauty and comfort.
With homes for sale in Oakville with so many great community features, it's no wonder that in Oakville, new homes sell so fast!
1. For Families
School systems in the area have exceptional educational resources and focus on individual development of each child. Award-winning programs, excellent school libraries, computer labs and dedicated teachers combine to offer your children the opportunity to develop and excel.
There are a variety of resources of other family and friends, including a regional hospital dedicated to improving the health of residents and the public library, where residents are not only recently published books and periodicals, but the summer programs for children all ages.
2. Educational opportunities
The Oakville Centre for the Performing Arts is an award-winning site that hosts everything from the original games and musical performances to comedians and variety acts. You will be able to enjoy an evening of great talent, without having to drive in downtown Toronto. Downtown restaurants and clubs offering everything from French cuisine to late night clubbing.
Annual events such as Days of Bronte Harbour and Jazz Festival draw talented performers and artists from around the world. If you love beautiful architecture, many houses for sale in Oakville have been beautifully restored to their original condition. If contemporary is your dream, there are a lot of Oakville new homes designed and built by local companies that focus on quality, beauty and sustainability.
3. The Great Outdoors Invite
When looking at Oakville, Ontario Real Estate, be sure to take in a natural environment. The great outdoors is an integral part of life. Many Oakville new homes are constructed to take maximum advantage of the many natural wonders of the area.
With over 2,400 acres of parks and open spaces, the city offers cycling and trekking, golf courses, nature trails and many other outdoor recreational opportunities. The seafront has two ports for boaters and lovers of water sports and golf is a favorite activity for many people buying homes for sale in Oakville.
4. A business Segment Strong
In Oakville, new homes are always under construction, in order to meet the
the demand for young urban professionals. Since this area is a hub for industries ranging from life sciences to emerging technologies, is also a center of research and learning that provides opportunities for growth and new job opportunities. Over 260 national and international locations for businesses of all sizes and a focus on new and emerging technologies mean homes for sale in Oakville are often purchased by professionals from industries cutting edge.
5. Environmental Responsibility
Newer homes are built by some of the best employers in the residential sector, with a focus on sustainability and the maintenance of minimum ecological impact on the planet. The city has implemented green initiatives through a comprehensive environmental strategy.
Programs like a Blue W, which offers free refills of tap water throughout the city, the initiative Towards Zero Waste, green building and LEED certified by independent contractors, so you'll be proud of your Oakville, Ontario Real Estate for sustainability, as well as its beauty and comfort.
With homes for sale in Oakville with so many great community features, it's no wonder that in Oakville, new homes sell so fast!
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