Monday, June 18, 2012
Finance Minister`s concern sparks new draft guidelines on housing finance
To make households, the economy and the financial system less vulnerable to risk, Finance Minister Flaherty also asked OSFI to prepare guidelines for a safer housing finance system.
In March 2012, OSFI released draft guidelines for residential mortgage underwriting practices and procedures which will likely become part of new regulations for federally-regulated institutions.
On June 6, OSDI released an interim update on the guidelines. The guidelines now include a requirement that lenders develop internal policies governing their underwriting of residential mortgage loans.
Lenders will remain responsible for deciding what level of review o place on borrowers’ qualifications at the time of renewal, which may include:
Lenders will be required to periodically review (not necessarily at renewal) borrowers’ credit risk and repayment capacity.
For home equity lines of credit, new appraisal processes will be used. Home equity lines of credit will also be limited to 65 per cent of a property’s value.
Minister Flaherty has tightened mortgage rules three times in the past four years and is also expected to introduce new regulations in the next year to raise the minimum down payment from the current five per cent and to reduce the maximum amortization period to 25 years from the current 30 years.
Article from Realtor Link, June 15, 2012
Tuesday, April 24, 2012
New Mortgage Code of Conduct
As of November 5, 2012, federally-regulated financial institutions will be required to disclose information to borrowers about prepayment and refinancing options, amounts and charges, penalties and ways to avoid them. The Mortgage Prepayment Information Code of Conduct also requires lenders to make this information available on a website which includes calculators and guidance to borrowers. Lenders must also provide toll-free telephone help and a written statement of prepayment charges as requested by borrowers. The federal goverment did not standadize the penalty calculation formula in this new code.
For information visit: www.fin.gc.ca/n12/12-025-eng.asp
Monday, April 23, 2012
The Federal Budget - some good news for home owners
Federal Finance Minister Jim Flaherty tabled the 2012 Federal Budget on March 29, 2012. Eliminating the deficit by 2015 is a key goal and the government plans to do this by cutting spending by $1.4 billion in 2012/13 and by $3.9 billion in 2013/14 for a total of $5.3 billion. With unemployment steady at 7.5% and record household debt, property buyers and owners were looking for any glimmer of good news. The government did offer some hope.
• $205 million to extend the Hiring Credit for Small Business program to encourage hiring. A small-business employer can receive credit of up to $1,000 to help offset employment insurance premiums.
• $165 million over 2 years for responsible resource development which creates jobs and protects the environment.
• $150 million over two years on the Community Infrastructure Improvement Fund for repairs and improvements to community facilities.$99.2 million over three years to help provinces develop permanent flood mitigation measures.
• $67 million through the National Research Council on business-led, industry-relevant research.
• $60 million over two years to protect wildlife at risk.
• $35.7 million over two years for inspections and emergency preparedness to improve oil tanker safety.
Spending on innovation
• $500 million over five years, (to begin in 2014) to the Canada Foundation to support innovation in advanced research infrastructure.
• $105 million over two years to support forestry innovation and market development.
• $100 million to the Business Development Bank of Canada to support its venture capital activities.
• $37 million annually to granting councils to enhance support for industry-academic research partnerships.
Cutting red tape
• Streamline the multiple-step regulatory process to a single-step review known as “one project, one review.” This will include amending the Canadian Environmental Protection Act.
• Streamline the process for approving major economic projects.
• Introduce a legislative amendment clarifying the prohibition against banks selling life insurance.
There will be no new personal or corporate taxes or tax increases.
Excerpt from April 20, 2012 Realtor Link Article
Monday, January 30, 2012
9 Tax Deductions Canadians Often Miss
Does the looming tax deadline have you gritting your teeth? Here's how to get a bigger, better refund.
Does the looming tax deadline have you gritting your teeth? We all have to pay our taxes. And nobody wants to pay too much.
“Unfortunately, people tend to pay more tax than they need to because they do tend to overlook some of the savings they can take advantage of,” said Carol Bezaire, vice-president, tax and estate planning, at Mackenzie Financial.
A deduction is valuable because it reduces your income for tax purposes.
Rack up enough of deductions and you’ll pull yourself down into a lower tax bracket and end up with a big refund, if you’re lucky.
These are worth more to those in higher tax brackets. By contrast, a non-refundable tax credit reduces the amount of taxes owed. The value is the same for everyone. The term “non-refundable” refers to the fact that if the tax credit exceeds the amount of tax payable, you won’t get a refund for the difference.
1. RRSPs: Contributions to Registered Retirement Savings Plans are the mother of all tax deductions. Roughly speaking, you are allowed to contribute up to 18 per cent of your earned income from the previous year, and deduct that amount from your income at tax time.
The government even gives you an extra two months past the end of the previous calendar year to sock that money away. (That’s why January and February are known as RRSP season.) The trick here is that you can carry forward contribution room indefinitely.
You can also carry the deduction forward to use in a year when your income is higher. Check your Notice of Assessment from the Canada Revenue Agency for more details about how much you are allowed to contribute and deduct.
If you carry forward those RRSP contributions to deduct in a future year, keep track of them carefull. This amount will determine how much you can put into your account in the current year.
2. Capital losses: Losses from buying and selling shares in an unregistered account (not your RRSP or your TFSA) can be carried back to any of the previous three years or carried forward indefinitely. These can be applied against capital gains to reduce your total income from investments.]
3. An equivalent-to-spouse-tax-credit: Taxpayers who are single, divorced or separated with children, can be claimed for a child. This non-refundable tax credit is worth $10,527 this year federally. (That’s multiplied by 15 per cent when calculating the final credit, but it’s still far higher than the $4,282 tax credit for a dependent child.)
In the case of a child, the dependent has to be a Canadian, resident, under 18, and financially dependent on you.
4. Child care expenses: These expenses, whether for a nanny or day-care centre, must be claimed by the parent with lower net income in most cases. Allowable expenses are those paid for the care of a child age 6 or under, to enable the parent to work, carry on a business, or go to school.
5. Medical expenses: Claim non-refundable tax credits for medical expenses paid by either you or your spouse or common-law partner.
“People forget to take a look or they assume it’s not eligible,” Bezaire said. But, in fact, any non-reimbursed medical expense can be claimed, including prescription medication, dental surgery that’s not covered by insurance, or laser eye surgery.
Expenses that total more than $2,052 or 3 per cent of net income can be claimed. To make the most of the tax credit, the expenses should be claimed by the person with the lower net income, Bezaire said.
6. Moving expenses: If you moved at least 40 km to be closer to a new job, run a business, or go to school, you may deduct the moving expenses. Eligible expenses include transportation and storage costs, reasonable costs for meals and accommodations, real estate commission, legal fees, and costs related to changing your address, such as replacing your driver’s licence and connecting or disconnecting utilities.
“What many people overlook is that you can claim the cost of moving your children to university or college,” Bezaire said. [More: 10 tax tips to save you money]
7. Carrying charges: This refers to costs incurred in order to earn income on your investments. Fees paid for the management of your investments, other than commissions, are eligible. If you use a safety deposit box for safekeeping your investments, you can claim the cost as a carrying charge.
8. Physical fitness and arts activities for children: Eligible programs must be supervised, appropriate for children and must be at least eight consecutive weeks or five consecutive days long, with at least half of the activities involving a significant amount of physical or artistic activity.
Additional tax credits are available for a child with a disability. The sports programs must build muscular strength, endurance, flexibility and balance. On the arts side, eligible programs can focus on literary, visual or performing arts, music or language.
9. Charitable donations: keep in mind that these donations can be carried forward.
“If you’re doing your housekeeping and find a charity receipt and you say, ‘rats, I didn’t use it’, hang on to it. You can still use it still.
If you have a spouse, pool them and include them on the return of the person who pays the most tax, she added.
January 27, 2012 YahooFinance Article by Madhari Acharya-Tom Yew, available online at http://ca.finance.yahoo.com/news/9-tax-deductions-canadians-often-miss.html
Friday, January 27, 2012
Is record household debt a problem for home owners?
Continuous bad news about rising Canadian debt has been making headlines for the past few years – and now we’re hearing over and over again that mortgage debt has reached epic proportions.
Is all of this negativity accurate? We decided to find out by asking some credible sources.
The truth about household debt.
It is true: the overall household debt of Canadians is at a record of $1.5 trillion, growing from $147 billion in 1982. Two-thirds of the increase from 1982 - 2010 occurred from 1999 - 2010.
Why have we seen high mortgage debt?
Mortgage holders are also typically younger, who have bought their home within five years, and who carry higher mortgage debt than those who have been in their homes longer.
How does mortgage debt compare with other debt?
Annual Growth Rates of Canadians’ Debt
Excerpt from January 2012 Edition of Realtor Link, Volume 13, Number 01
Tuesday, October 25, 2011
Bank of Canada Interest Rate Announcement
As was universally anticipated, the Bank of Canada opted to hold its target overnight rate at 1 per cent this morning. Ongoing uncertainty in the Euro-zone continues to weigh heavily on the Bank's outlook. In its statement accompanying the interest rate decision, it was noted that the bank is now projecting a contained Euro-crisis, but also a brief recession in the Euro-area due to ongoing deleveraging and fiscal austerity. The Bank also expects continued weakness, but no recession, in the United States through the first half of 2012 before a resumption of stronger growth. Given various challenges in the global economy, the Bank of Canada trimmed its outlook for Canadian economic growth to 2.1 per cent in 2011, 1.9 per cent in 2012 and 2.9 per cent in 2013 which is in line with our own forecast. On inflation, the Bank now expects slack in the economy to persist longer than originally forecast, leading to a closing of the output gap at the end of 2013. This implies softer than expected inflation in coming quarters, with consumer price growth moderating before returning to the Bank's 2 per cent target by the end of 2013.
Overall, this morning's statement shows a very cautious Bank of Canada that is unlikely to make any significant movements on interest rates over the next two to three quarters. Further monetary tightening will be highly contingent on a brighter growth outlook in the United States and a credible solution to the Euro sovereign debt crisis. Therefore we expect the Bank of Canada to remain on the sidelines through the end of 2011 and the first half of 2012.
BCREA, Chief Economist
Wednesday, April 27, 2011
10 Often Forgotten Costs to Include in your Budget
This covers any costs in the gap between closing dates and first mortgage payment. Avoid or minimize this by arranging the closing date and first payment to be exactly one month apart.
This is often required by lenders if your payment is 20 per cent or less.
The average cost is roughly $100 per hour, but some inspectors may charge by size or flat fee packages.
If there is not one available and your bank requires one, expect to pay anywhere from $750 - $1500.
These will vary greatly, depending on who you choose to use, but expect to pay anywhere from $1000 to $3000.
This may be required by your lender, however it is often included as part of the mortgage package (or broker service). If it is not, expect to pay $100-250 dollars.
Cost will vary greatly, as will the services offered.
This covers the costs of items paid for in advance by Seller, such as taxes or hydro.
Land Transfer Tax
Property purchase tax must be paid for any property to be transferred to a new owner.
Parking or storage may incur a seperate monthly fee. There are often move in or elevator fees. Review the bylaws and minutes beforehand.
Categories: 2011 | 2012 | 2013 | Amalia Liapis | Amalia Liapis; | Awards | banking | BC | Best | Buying | Canada | Closing Costs | Commercial | condos | Cute Video | Finances | financing | forecast | Home | Houses | Housing | HST | Insurance | investments | Legislation | Market | Market Stats | market trends | MLS Listings | mortgage | mortgages | price index | Prices | Re/max | real e | Real Estate | Sales | Selling | Stats | strata | Tax | Taxes | townhomes | Vancouver | Westender | Yaletown