The Governor of the Bank of Canada Stephen Poloz has gone into damage control mode, defending the bold actions carried out by the BoC in January when it shocked the market with a rate cut.
During a speech in the Canada-UK Chamber of Commerce in London last week, Polos was asked whether the credibility of the central bank should be called into question following the surprise move.
“It probably won’t come as a surprise to you that I would say no,” he told the audience, according to the Financial Post. “Central banks are doing their jobs in a very challenging setting.”
Poloz did, however, admit that the Bank of Canada knew the rate cut would come as a surprise to investors and real estate professionals alike.
“We knew that financial markets would be surprised by the move in January, and we generally prefer to avoid surprises,” Poloz said. “But we will do what is necessary to fulfill our inflation-targeting mandate.”
In late January, the BoC announced it was lowering its target for the overnight rate by one-quarter of one percentage point to 0.75 per cent. It said the move was in response to plummeting oil prices.
To say the move was a surprise is an understatement. It had many industry players questioning the credibility of the bank.
“Part of the significance of the announcement by the Bank of Canada is not the rate announcement but the fact that they surprised the markets in doing it, which would lead us to believe that there could be further shocks to the system,” Calum Ross of Verico Calum Ross Mortgage told CREW sister site, MortgageBrokerNews.ca at the time.
“I don’t think further rate cuts are out of the question when they surprise us with this.
“It’s uncharacteristic for a central bank to surprise the market – the very basis of stability of a financial system is about maintaining the trust and not having surprises happen.”
For his part, though, Poloz believes the bank’s credibility should be judged based on how it meets its goals.
“Ultimately, our credibility will hinge on how well we meet our mandate,” Poloz said.
Source: http://www.canadianrealestatemagazine.ca/news/poloz-answers-critics-questioning-bocs-credibility-189809.aspx
Monday, March 30, 2015
Thursday, March 26, 2015
5 ways to increase your property's curb appeal
Curb appeal is one of the most important things to consider then you are looking to rent out your income property. But as owners, we can sometimes become blind to some of the little things that our potential renters will notice.
These items can be pleasant surprises; however, for the most part, they are things that make the property look dated, uninviting or even scary to those who haven’t had the opportunity to step in and see how beautiful the property may be inside.
I find this happens the most to owners who have recently renovated their property. They spend months and thousands of dollars renovating their unit to look beautiful, but then skip or leave the outside until last. This not only makes the renting of this unit a lot more difficult, you will also probably have to reduce your rent to compensate for the poor look of the exterior.
I've heard stories from tenants who had gone to look at a rental unit that were apparently fully renovated, but then they didn’t even bother to get out of the car because the outside looked terrible.
So, whether you're doing a reno or just looking to spruce up your income property, here are five areas of curb appeal to consider improving to ensure your home looks as fresh and inviting as the inside does.
1. Gardens and flowers.
Everyone loves the look of fresh flowers and a few shrubs in the front of a house. The trick here is to buy shrubs and flowers that require as little maintenance and care as possible. The last thing you want is to have to tend to this garden every day.
Head to your local nursery and ask for flowers that are durable and others that come up on their own every year like tulips. Shrubs are usually pretty easy to care for, just make sure you don’t buy one that needs to be trimmed or will grow so big it overtakes the front of the house.
2. Trim trees and shrubs.
All too often I come across a house that has a massively overgrown tree on the front lawn or bushes that make you wonder if there is even a house back there. Trimming back these trees and bushes will show the beauty of your property and make it much more inviting to others.
3. Paint.
Paint can go a long way to making an old house look new again. You don’t need to paint the whole outside, although that is certainly an option. Most of the time just repainting old wooden-framed windows and doors white will help a lot. Also, if you have rusted railings, painting them black and cleaning them up will help a lot with the overall look of the house.
4. Walkways/curbing and grass.
The ground these perspective tenants walk on is just as important visually as the actual house. Making sure the walkways are clean, safe and level is very important. Broken up and cracked concrete walkways will make any house look cheap and uncared for.
Having a lawn that looks like an Arizona dustbowl won’t work either. Tenants want a lawn and yard that is green, lush and appealing. So take the time to turn you patchy weed garden into the lawn every Canadian desires
5. Scheduled maintenance.
Take the time yourself or have someone go by your property a few times a year to clean the gutters out, pick up random debris, power wash the driveway, maintain the gardens, etc. The goal is for your house to not look like a typical rental.
Your neighbours will love you, your tenants will appreciate the effort and you can drive by it with a sense of pride. Win, Win, Win.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/5-ways-to-increase-your-propertys-curb-appeal-189637.aspx
These items can be pleasant surprises; however, for the most part, they are things that make the property look dated, uninviting or even scary to those who haven’t had the opportunity to step in and see how beautiful the property may be inside.
I find this happens the most to owners who have recently renovated their property. They spend months and thousands of dollars renovating their unit to look beautiful, but then skip or leave the outside until last. This not only makes the renting of this unit a lot more difficult, you will also probably have to reduce your rent to compensate for the poor look of the exterior.
I've heard stories from tenants who had gone to look at a rental unit that were apparently fully renovated, but then they didn’t even bother to get out of the car because the outside looked terrible.
So, whether you're doing a reno or just looking to spruce up your income property, here are five areas of curb appeal to consider improving to ensure your home looks as fresh and inviting as the inside does.
1. Gardens and flowers.
Everyone loves the look of fresh flowers and a few shrubs in the front of a house. The trick here is to buy shrubs and flowers that require as little maintenance and care as possible. The last thing you want is to have to tend to this garden every day.
Head to your local nursery and ask for flowers that are durable and others that come up on their own every year like tulips. Shrubs are usually pretty easy to care for, just make sure you don’t buy one that needs to be trimmed or will grow so big it overtakes the front of the house.
2. Trim trees and shrubs.
All too often I come across a house that has a massively overgrown tree on the front lawn or bushes that make you wonder if there is even a house back there. Trimming back these trees and bushes will show the beauty of your property and make it much more inviting to others.
3. Paint.
Paint can go a long way to making an old house look new again. You don’t need to paint the whole outside, although that is certainly an option. Most of the time just repainting old wooden-framed windows and doors white will help a lot. Also, if you have rusted railings, painting them black and cleaning them up will help a lot with the overall look of the house.
4. Walkways/curbing and grass.
The ground these perspective tenants walk on is just as important visually as the actual house. Making sure the walkways are clean, safe and level is very important. Broken up and cracked concrete walkways will make any house look cheap and uncared for.
Having a lawn that looks like an Arizona dustbowl won’t work either. Tenants want a lawn and yard that is green, lush and appealing. So take the time to turn you patchy weed garden into the lawn every Canadian desires
5. Scheduled maintenance.
Take the time yourself or have someone go by your property a few times a year to clean the gutters out, pick up random debris, power wash the driveway, maintain the gardens, etc. The goal is for your house to not look like a typical rental.
Your neighbours will love you, your tenants will appreciate the effort and you can drive by it with a sense of pride. Win, Win, Win.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/5-ways-to-increase-your-propertys-curb-appeal-189637.aspx
Monday, March 23, 2015
Is it the time of year for renovations?
Spring is in the air and the change in weather is the perfect time for landlords to drive by their investment properties and look for proactive ways to enhance its appeal.
“This might be fixing the roof, the siding, painting outside, fixing foundation cracks or updating an electrical panel,” said Quentin D’Souza, an investor and chief education officer at Durham Real Estate Investors.
It’s also an ideal time of year to take a proactive look at your capital expenses so you’re prepared for any big jobs coming up this year. “There’s a difference between a reactive and proactive person,” added D’Souza. “It’s okay to be reactive, but you’re going to do more work.”
Jose Jafferji, an investor and Realtor, added: “The tenants will start looking if they’re unhappy with the place, but if you’re able to keep them happy and take care of all the maintenance requests that they have, that makes the tenants stay a lot longer and will save you a lot of money in the end.”
It might be that these upgrades are designed to keep your current tenants happy, but the change in temperature also offers an opportunity to improve the curb appeal to bring in new tenants.
If a tenant is moving on, start planning what can be done to enhance the property. “Backsplash in kitchen, new hardware in the bathroom and kitchen, better lighting,” suggested Jafferji.
Source: http://www.canadianrealestatemagazine.ca/news/is-it-the-time-of-year-for-renovations-189512.aspx
“This might be fixing the roof, the siding, painting outside, fixing foundation cracks or updating an electrical panel,” said Quentin D’Souza, an investor and chief education officer at Durham Real Estate Investors.
It’s also an ideal time of year to take a proactive look at your capital expenses so you’re prepared for any big jobs coming up this year. “There’s a difference between a reactive and proactive person,” added D’Souza. “It’s okay to be reactive, but you’re going to do more work.”
Jose Jafferji, an investor and Realtor, added: “The tenants will start looking if they’re unhappy with the place, but if you’re able to keep them happy and take care of all the maintenance requests that they have, that makes the tenants stay a lot longer and will save you a lot of money in the end.”
It might be that these upgrades are designed to keep your current tenants happy, but the change in temperature also offers an opportunity to improve the curb appeal to bring in new tenants.
If a tenant is moving on, start planning what can be done to enhance the property. “Backsplash in kitchen, new hardware in the bathroom and kitchen, better lighting,” suggested Jafferji.
Source: http://www.canadianrealestatemagazine.ca/news/is-it-the-time-of-year-for-renovations-189512.aspx
Friday, March 20, 2015
How to spot a real estate scam
New technology has made it easier for investors to get all the information they need to facilitate their hunt for a new property – but the Internet has also made it easier for fraudsters to target investors and homebuyers.
Global property network Lamudi has compiled a list of the top ways for investors to avoid being duped by a real estate scammer.
Global property network Lamudi has compiled a list of the top ways for investors to avoid being duped by a real estate scammer.
- Always insist on inspecting the property.
- Verify the identity of the person you are dealing with.
- Avoid listings that have been posted multiple times.
- Never give away your personal information or documents.
- Remember that if it sounds too good to be true, it probably is.
- If you detect a scam, get in touch.
Monday, March 16, 2015
Was the rate cut the wrong move?
The move is having a positive impact on homebuyers and investors, but one analyst believes the Bank of Canada's decision to cut the overnight rate in late January will negatively affect the economy.
“Up until January of this year, the Bank of Canada’s usual method of relaying monetary information was through a defined, transparent process that was familiar to the market,” Paul Gardner, a portfolio manager with Avenue Investment Management wrote in a guest column for the Globe and Mail.
“The central bank had spent more than a decade nurturing this transparency, especially under Mark Carney's tenure. This measured process was abandoned on Jan. 21 with a shocking rate cut.”
Gardner believes the move was unnecessary, pointing to a Canadian economy that is growing at around 2.25 per cent.
To say the move to cut the overnight rate to 0.75 per cent came as a shock is an understatement.
According to a Bloomberg news article about the rate cut, none of the 22 economists who took a Bloomberg news survey predicted a rate cut. And many industry players cried foul over the move.
“Part of the significance of the announcement by the Bank of Canada is not the rate announcement but the fact that they surprised the markets in doing it, which would lead us to believe that there could be further shocks to the system,” Calum Ross of Verco Calum Ross Mortgage told CREW's sister site, MortgageBrokerNews.ca, following the announcement.
“I don’t think further rate cuts are out of the question when they surprise us with this. It’s uncharacteristic for a central bank to surprise the market – the very basis of stability of a financial system is about maintaining the trust and not having surprises happen.”
Of course, the central bank held the overnight rate at its latest announcement, but could further surprise cuts be in the cards? Gardner hopes not.
“… the rate cut will only further fuel the overextended housing rally and private debt consumption,” Gardner wrote. “Over the past several years, the Bank of Canada has been obsessed with lowering consumer debt accumulation. The rate cut goes completely against this astute strategy and blatantly encourages more consumer debt."
Source: http://www.canadianrealestatemagazine.ca/news/was-the-rate-cut-the-wrong-move-189207.aspx
“Up until January of this year, the Bank of Canada’s usual method of relaying monetary information was through a defined, transparent process that was familiar to the market,” Paul Gardner, a portfolio manager with Avenue Investment Management wrote in a guest column for the Globe and Mail.
“The central bank had spent more than a decade nurturing this transparency, especially under Mark Carney's tenure. This measured process was abandoned on Jan. 21 with a shocking rate cut.”
Gardner believes the move was unnecessary, pointing to a Canadian economy that is growing at around 2.25 per cent.
To say the move to cut the overnight rate to 0.75 per cent came as a shock is an understatement.
According to a Bloomberg news article about the rate cut, none of the 22 economists who took a Bloomberg news survey predicted a rate cut. And many industry players cried foul over the move.
“Part of the significance of the announcement by the Bank of Canada is not the rate announcement but the fact that they surprised the markets in doing it, which would lead us to believe that there could be further shocks to the system,” Calum Ross of Verco Calum Ross Mortgage told CREW's sister site, MortgageBrokerNews.ca, following the announcement.
“I don’t think further rate cuts are out of the question when they surprise us with this. It’s uncharacteristic for a central bank to surprise the market – the very basis of stability of a financial system is about maintaining the trust and not having surprises happen.”
Of course, the central bank held the overnight rate at its latest announcement, but could further surprise cuts be in the cards? Gardner hopes not.
“… the rate cut will only further fuel the overextended housing rally and private debt consumption,” Gardner wrote. “Over the past several years, the Bank of Canada has been obsessed with lowering consumer debt accumulation. The rate cut goes completely against this astute strategy and blatantly encourages more consumer debt."
Source: http://www.canadianrealestatemagazine.ca/news/was-the-rate-cut-the-wrong-move-189207.aspx
Wednesday, March 11, 2015
Tips for properly screening your next tenant
After all the hours of research and stress involved in locating, inspecting and purchasing the perfect rental property, the next step is probably the most important part of the whole process – finding a good tenant.
Ontario, where I invest, is a pro-tenant province. Once the tenant moves in, they have the upper hand. It’s an unfortunate situation for the landlord if the tenant turns out to be less than perfect. Not to mention, the possibility of a less than perfect tenant living in YOUR house. Hopefully, they are still making their monthly rent payments, but this is obviously a situation that all investors want to avoid. So, how do we do that?
Naturally, you would meet the prospective tenant face-to-face when you show them the rental unit. Ask yourself: How do they present themselves? Did they arrive on time? Do they take off their shoes when they come in the front door? If they brought their children with them, how did they behave? Is their physical appearance "put together" or do they look unkempt?
One interesting trick that was passed on to me from my Dad was to walk the prospective tenant out to their car and look inside. Is it a total disaster inside? Chances are good that the interior of the car could reflect how they will take care of the home. Most of all, rely on your instincts when meeting the tenant.
Always do a proper credit check and be sure to verify all documents, including identification, paystubs, T4s and notice of assessment references. When you’re provided a phone number to call for a reference, be sure to Google the company name and call the direct line to the company asking for the supervisor as opposed to calling the given number, which could possibly be a friend of the tenant pretending to be someone else. Sounds strange, but it does happen!
These are a few of the many ways to qualify and screen a potential tenant. In the end, you’ll still be taking a leap of faith in your candidates. Of course, you can continue to minimize your risk after you select a tenant and they move in by doing periodic scheduled checks of the property.
The tenant is your customer and one of your top priorities; it’s important to remember to treat them well and hopefully they will reciprocate that treatment to you and your property. Good luck!
Source: http://www.canadianrealestatemagazine.ca/expert-advice/tips-for-properly-screening-your-next-tenant-189038.aspx
Ontario, where I invest, is a pro-tenant province. Once the tenant moves in, they have the upper hand. It’s an unfortunate situation for the landlord if the tenant turns out to be less than perfect. Not to mention, the possibility of a less than perfect tenant living in YOUR house. Hopefully, they are still making their monthly rent payments, but this is obviously a situation that all investors want to avoid. So, how do we do that?
Naturally, you would meet the prospective tenant face-to-face when you show them the rental unit. Ask yourself: How do they present themselves? Did they arrive on time? Do they take off their shoes when they come in the front door? If they brought their children with them, how did they behave? Is their physical appearance "put together" or do they look unkempt?
One interesting trick that was passed on to me from my Dad was to walk the prospective tenant out to their car and look inside. Is it a total disaster inside? Chances are good that the interior of the car could reflect how they will take care of the home. Most of all, rely on your instincts when meeting the tenant.
Always do a proper credit check and be sure to verify all documents, including identification, paystubs, T4s and notice of assessment references. When you’re provided a phone number to call for a reference, be sure to Google the company name and call the direct line to the company asking for the supervisor as opposed to calling the given number, which could possibly be a friend of the tenant pretending to be someone else. Sounds strange, but it does happen!
These are a few of the many ways to qualify and screen a potential tenant. In the end, you’ll still be taking a leap of faith in your candidates. Of course, you can continue to minimize your risk after you select a tenant and they move in by doing periodic scheduled checks of the property.
The tenant is your customer and one of your top priorities; it’s important to remember to treat them well and hopefully they will reciprocate that treatment to you and your property. Good luck!
Source: http://www.canadianrealestatemagazine.ca/expert-advice/tips-for-properly-screening-your-next-tenant-189038.aspx
Monday, March 9, 2015
How to take advantage of opportunities in a flat market
In a real estate market that has been chugging along year after year with continued job growth, population growth, increased GDP and a friendly lending environment, opportunities to make money in real estate were everywhere.
It was very simple, actually – buy a piece of cash-flowing real estate and wait a few years. After those few years, sell for a profit and live happily ever after. The end.
Then, all of a sudden, things changed. From that never-fail market that has been a reality in most provinces in the past five years (particularly out west), it seemed like the brakes were applied. Oil started its slide from triple digits to barely hanging on to half of its 2014 peak value. The headlines started to pop up, none of which painted a very rosy picture for the real estate market in some centres (again, particularly out west).
So where does that leave the real estate investor? The answer to that question depends on that kind of an investor you are. For the investor who shivers at the thought of a few years of zero or minimal growth, or perhaps even a decline, it leaves them in the cold, dark and miserable place of fear and uncertainty. For the investor who is willing to roll up their sleeves, put their thinking caps on and get to work, it leaves them on the starting line of a track of opportunity.
Here are some positive touch points for investors who want to lean into this slowing (at least as being perceived) market:
If you’re sophisticated, and know your market fundamentals, there just may be a chance that you could pick up a really good deal from somebody too fearful to stay in the market. Use your intimate knowledge of the market to your advantage here – try not to convince them that in 10 years from now, none of this will be relevant, and there is a good chance that real estate will weather this rough patch like it always has.
Eventually, you may walk away with a strong property in a stable market that you purchased well under value thanks to somebody else’s nervousness. Private sales are your friend in this case. Have your lawyer on speed dial and some blank offers with you at all times.
By the way, one thing that works much better than a business card after making contact with a vendor is a deposit cheque along with your offer. Nothing says “I’m ready right now, today” better than a cheque made out to their lawyers trust account.
This equates to more customers lining up outside the doors of a retail store, a basic increase in demand for rental housing. The reason I used the word “temporary” above is because affordability increases will create more room for first-time buyers, or people upsizing, therefore shifting the demand back to the market.
Real estate is a very inefficient monster, where the impacts of basic economics usually work their way into the market months or years later. As an investor, remember to use caution with this, as interest rates are extremely low right now. It would be prudent to conduct analysis at a higher cost of borrowing and stress test your current portfolio.
Advice: Visit and evaluate your exit strategy for each property. Focus on why you got started in the business to begin with – focus on your end game. Lean on your peers for support and ideas. Join a solid investment club in your area (I’m a REIN member; it’s top-notch) for tools and advice you can count on. Keep your vision intact and let the information be your guide.
This is how you will be on your game when the fear-mongering gives you deal after deal, or when your contractor shows up the next day to overhaul a tired property that you can put back on the market for premium rent. As it is right now, a tenant just left a unit of ours in such a state that we had virtually no choice but to overhaul it – and our new tenant cannot wait to move in.
It was very simple, actually – buy a piece of cash-flowing real estate and wait a few years. After those few years, sell for a profit and live happily ever after. The end.
Then, all of a sudden, things changed. From that never-fail market that has been a reality in most provinces in the past five years (particularly out west), it seemed like the brakes were applied. Oil started its slide from triple digits to barely hanging on to half of its 2014 peak value. The headlines started to pop up, none of which painted a very rosy picture for the real estate market in some centres (again, particularly out west).
So where does that leave the real estate investor? The answer to that question depends on that kind of an investor you are. For the investor who shivers at the thought of a few years of zero or minimal growth, or perhaps even a decline, it leaves them in the cold, dark and miserable place of fear and uncertainty. For the investor who is willing to roll up their sleeves, put their thinking caps on and get to work, it leaves them on the starting line of a track of opportunity.
Here are some positive touch points for investors who want to lean into this slowing (at least as being perceived) market:
- Fear is your friend.
If you’re sophisticated, and know your market fundamentals, there just may be a chance that you could pick up a really good deal from somebody too fearful to stay in the market. Use your intimate knowledge of the market to your advantage here – try not to convince them that in 10 years from now, none of this will be relevant, and there is a good chance that real estate will weather this rough patch like it always has.
Eventually, you may walk away with a strong property in a stable market that you purchased well under value thanks to somebody else’s nervousness. Private sales are your friend in this case. Have your lawyer on speed dial and some blank offers with you at all times.
By the way, one thing that works much better than a business card after making contact with a vendor is a deposit cheque along with your offer. Nothing says “I’m ready right now, today” better than a cheque made out to their lawyers trust account.
- A temporary price decline may actually help a real estate investor.
This equates to more customers lining up outside the doors of a retail store, a basic increase in demand for rental housing. The reason I used the word “temporary” above is because affordability increases will create more room for first-time buyers, or people upsizing, therefore shifting the demand back to the market.
Real estate is a very inefficient monster, where the impacts of basic economics usually work their way into the market months or years later. As an investor, remember to use caution with this, as interest rates are extremely low right now. It would be prudent to conduct analysis at a higher cost of borrowing and stress test your current portfolio.
- This is a golden opportunity to start taking advantage of access to labour.
Advice: Visit and evaluate your exit strategy for each property. Focus on why you got started in the business to begin with – focus on your end game. Lean on your peers for support and ideas. Join a solid investment club in your area (I’m a REIN member; it’s top-notch) for tools and advice you can count on. Keep your vision intact and let the information be your guide.
This is how you will be on your game when the fear-mongering gives you deal after deal, or when your contractor shows up the next day to overhaul a tired property that you can put back on the market for premium rent. As it is right now, a tenant just left a unit of ours in such a state that we had virtually no choice but to overhaul it – and our new tenant cannot wait to move in.
Monday, March 2, 2015
Know the limitations of credit unions
Credit unions are slowly earning their chunk of the mortgage market, but brokers warn investors and homebuyers about the potential pitfalls of not knowing the limitations and carefully reading the fine print.
“When it comes to porting, a mortgage credit union has one big disadvantage: If you have to move out of province you will not be able to port your mortgage and will have to pay a penalty to break the mortgage,” one broker wrote on CREW's sister site, MortgageBrokerNews.ca.
“Also, [with] some [credit unions] you have to live a certain distance from the nearest branch. If there is no branch near your new home, you will not be able to port your mortgage.”
Credit unions currently account for six per cent of mortgages funded in Canada, according to CAAMP's most recent Annual State of the Mortgage Market in Canada report.
And while they may be growing in popularity, brokers have mentioned the potential shortfalls of the mortgages on offer from certain companies, including refinancing and porting limitations.
However, as one reader points out, these limitations aren’t ubiquitous across the channel and it’s all about doing your due diligence before closing the deal.
“Some credit unions do operate in more than one province," a broker wrote on MortgageBrokerNews.ca. "Credit unions also have much more flexibility than a bank or monoline does, and offer commonsense in a banking industry that has lost that.
“I have worked for banks, credit unions and as a broker; credit unions are my choice over monolines or banks any day.”
“When it comes to porting, a mortgage credit union has one big disadvantage: If you have to move out of province you will not be able to port your mortgage and will have to pay a penalty to break the mortgage,” one broker wrote on CREW's sister site, MortgageBrokerNews.ca.
“Also, [with] some [credit unions] you have to live a certain distance from the nearest branch. If there is no branch near your new home, you will not be able to port your mortgage.”
Credit unions currently account for six per cent of mortgages funded in Canada, according to CAAMP's most recent Annual State of the Mortgage Market in Canada report.
And while they may be growing in popularity, brokers have mentioned the potential shortfalls of the mortgages on offer from certain companies, including refinancing and porting limitations.
However, as one reader points out, these limitations aren’t ubiquitous across the channel and it’s all about doing your due diligence before closing the deal.
“Some credit unions do operate in more than one province," a broker wrote on MortgageBrokerNews.ca. "Credit unions also have much more flexibility than a bank or monoline does, and offer commonsense in a banking industry that has lost that.
“I have worked for banks, credit unions and as a broker; credit unions are my choice over monolines or banks any day.”
Know the limitations of credit unions
Credit unions are slowly earning their chunk of the mortgage market, but brokers warn investors and homebuyers about the potential pitfalls of not knowing the limitations and carefully reading the fine print.
“When it comes to porting, a mortgage credit union has one big disadvantage: If you have to move out of province you will not be able to port your mortgage and will have to pay a penalty to break the mortgage,” one broker wrote on CREW's sister site, MortgageBrokerNews.ca.
“Also, [with] some [credit unions] you have to live a certain distance from the nearest branch. If there is no branch near your new home, you will not be able to port your mortgage.”
Credit unions currently account for six per cent of mortgages funded in Canada, according to CAAMP's most recent Annual State of the Mortgage Market in Canada report.
And while they may be growing in popularity, brokers have mentioned the potential shortfalls of the mortgages on offer from certain companies, including refinancing and porting limitations.
However, as one reader points out, these limitations aren’t ubiquitous across the channel and it’s all about doing your due diligence before closing the deal.
“Some credit unions do operate in more than one province," a broker wrote on MortgageBrokerNews.ca. "Credit unions also have much more flexibility than a bank or monoline does, and offer commonsense in a banking industry that has lost that.
“I have worked for banks, credit unions and as a broker; credit unions are my choice over monolines or banks any day.”
“When it comes to porting, a mortgage credit union has one big disadvantage: If you have to move out of province you will not be able to port your mortgage and will have to pay a penalty to break the mortgage,” one broker wrote on CREW's sister site, MortgageBrokerNews.ca.
“Also, [with] some [credit unions] you have to live a certain distance from the nearest branch. If there is no branch near your new home, you will not be able to port your mortgage.”
Credit unions currently account for six per cent of mortgages funded in Canada, according to CAAMP's most recent Annual State of the Mortgage Market in Canada report.
And while they may be growing in popularity, brokers have mentioned the potential shortfalls of the mortgages on offer from certain companies, including refinancing and porting limitations.
However, as one reader points out, these limitations aren’t ubiquitous across the channel and it’s all about doing your due diligence before closing the deal.
“Some credit unions do operate in more than one province," a broker wrote on MortgageBrokerNews.ca. "Credit unions also have much more flexibility than a bank or monoline does, and offer commonsense in a banking industry that has lost that.
“I have worked for banks, credit unions and as a broker; credit unions are my choice over monolines or banks any day.”
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