I Am Langley » Keith Macdonald’s Blog http://www.iamlangley.com Mon, 23 Aug 2010 23:13:11 +0000 en hourly 1 http://wordpress.org/?v=3.0.1 How Will The HST Effect Me Buying A New Home http://www.iamlangley.com/langley-realestate-blog/hst-effect-new-home/ http://www.iamlangley.com/langley-realestate-blog/hst-effect-new-home/#comments Sun, 04 Jul 2010 00:04:13 +0000 admin http://www.iamlangley.com/?p=208 With the new Harmonized Sales Tax now in place in B.C. there have been a lot of questions regarding the effect it will have on the price of new homes. The answer is, it depends on the home you buy. To qualify for the rebate in place for new homes it must be your principle residence. The rebate is 71.43% of the provincial component of the HST to a maximum of $26,500.00 The maximum rebate of $26,500 is based on the maximum house price of $525,000. So in other words if you purchase a home over $525,000 you will still only get the $26,500.

The rules around the rebate are somewhat complicated and as with most legislation not easy to understand. However the short version is the new housing rebates are administered by the Federal Government. Individuals file an application for the rebate directly with the Canada Revenue Agency. However in cases of homes sold by the builder, the builder would have the option of paying or crediting the new housing rebate to the purchaser at the time of the purchase.

]]> http://www.iamlangley.com/langley-realestate-blog/hst-effect-new-home/feed/ 0 Are You Ready To Buy A Home http://www.iamlangley.com/langley-realestate-blog/ready-to-buy-home/ http://www.iamlangley.com/langley-realestate-blog/ready-to-buy-home/#comments Thu, 10 Jun 2010 19:50:19 +0000 admin http://www.iamlangley.com/?p=189 That is a very good question that many prospective home buyers never really ask themselves. Usually it is a first time home buyers, who think they can afford their own home finally. The operative word here is THINK. As a Realtor, obviously I would love to help my clients find a new home for themselves and their families. However, I also want to be their Realtor and their friend for a long time. If I don’t ask the right questions I am not helping them but rather getting them into a problem area that may take some time to get out of. I would much sooner lose a potential sale than risk my reputation and the financial well being of a client.

OK , what’s the right questions. The questions are actually simple ones. Can you afford a home of your own and if you can how much can you afford?

I know these sound like simple questions and ones that a person would ask themselves before they call a Realtor to look for homes for them. The fact of the matter is, many prospective buyers don’t actually know how much money they will actually have to spend to buy a home of their own.

Many times buyer will save up for a down payment and once they have reached that magic number they start looking for their dream home. The magic number is usually the minimum down payment of 5%. Lets use the number of 5% of $400,000.00 for this example. So the couple saves their $20,000.00 and calls a Realtor to start looking for a $400,000.00 townhouse for them. They find the perfect place after a couple of months looking and make an offer. They stay within their budget and the offer is accepted at $400,000.00. So they go to the bank for their mortgage and the surprises start.( If it is a new townhouse there will be 12% HST on it less the rebate but we will assume for this exercise the home is not new) They find out that there is somehting called the land transfer tax which is 1% of the 1st $200,000 and 2 % of the remainder,which in this case means an additional $6000.00, Legal fees will be around $1000.00, the CMHC insurance premium will be an additional 2.9% on the amount being borrowed or $11,020.00. There will also be an adjustment on the taxes so this could be around $1000.00. There will be a charge for an inspection of approximately $400.00 to $500.00 There could also be a requirment for a title search by the bank.

So as you can see there are many costs that you should be aware of and talk to your Realtor about before you start your search. In this scenario the couple thought they would have a mortgage of $380,000.00 and have a payment of $1978.00 amortized over 25 years. Instead they have a mortage of $399,520.00 with payments of $2080.00 a month over 25 years. On top of that, there are usually things in the home that you need to repair or change soon after you take possession. So you should have a couple of thousand dollars left in order to do these repairs. They may even be small things like buying a barbeque and some patio furnature. Anyway, bottom line is talk to a good Realtor before you start, to see if you are in a position to buy at this time. You may still want to buy but perhaps a smaller place to start

]]> http://www.iamlangley.com/langley-realestate-blog/ready-to-buy-home/feed/ 0 What is Fort Langley All About http://www.iamlangley.com/langley-realestate-blog/fort-langley-real-estate/ http://www.iamlangley.com/langley-realestate-blog/fort-langley-real-estate/#comments Fri, 04 Jun 2010 19:11:31 +0000 admin http://www.iamlangley.com/?p=182 Fort Langley is a hidden gem in the Real Estate market of the Fraser Vally. Fort Langley is nestled along the Fraser river and the local residents try to keep its’ existence a secret. I think they want to preserve the flavour of this beautiful B.C. town for themselves as long as possible and I don’t blame them. I have know of Fort Langley for years obviously, but never really took the time to really stop and have a good look around. Last week I was showing some homes in the near the Fort and stood back and had a good look at how quaint it really is and what it offers its residents.

I think people pass through the Fort Langley residential areas without actually looking around at the homes there. They are usually on their way to the Fort itself or in the past the Albion ferry. After my showings I took the time to walk around some of the community and got an appreciation for the life that the residents live there. They have the best of every thing.

They have some small coffee shops and tea houses as well as many antique shops that people love to walk through. In addition the town has the history that goes with it. The first capital of B.C. now thats something to be proud of. Most of all, it still has the small town charm that is missing in so many communities. I’m glad I took the time to go for a walk through the residential areas and get a feel for the atmosphere. I will definitely be bringing more clients here.

If your interested in taking a look at Fort Langley real estate, or just want to talk about what makes Fort Langley so unique please give me a call. Keith Macdonald 604-530-0231 or send me an email at keith@iamlangley.com.

]]> http://www.iamlangley.com/langley-realestate-blog/fort-langley-real-estate/feed/ 2 What exactly is a Property Disclosure Statement http://www.iamlangley.com/langley-realestate-blog/what-exactly-is-a-property-disclosurre-statement/ http://www.iamlangley.com/langley-realestate-blog/what-exactly-is-a-property-disclosurre-statement/#comments Tue, 25 May 2010 20:24:01 +0000 admin http://www.iamlangley.com/?p=165 When I am listing a property this is usually the most asked question and the one that has the most concern attached to it. The client sometimes feel they are signing their life away or painting themselves in a corner by filling it out. Some agents don’t ask their clients to fill it out as they think it is too stressful. Clients ask “What ever happened to Buyer Beware”. Well the truth of the matter is that the current regulations covering Property Disclosure Statements probably protect the seller as much as the buyer and is also the fair way to do business. A buyer shouldn’t have to worry about buying a new home blind to all the things that could be a problem. The Disclosure Statement simply asks questions that  should be asked anyway during the transaction. My clients tend to get panicked when they don’t know the answer to one of the questions. I tell them to simply don’t guess, if you don’t know state that they Don’t know in the appropriate box. One of the questions is “Are you aware of any problems with the sanitary sewer system”. Now this is a straightforward question and again one that should be asked. If the seller has been having problems with their septic tank they can’t keep it a secret from a potential buyer. Remember everyone is a potential buyer and how would you feel if you were in this situation and  a seller didn’t tell you of a problem and you found the back yard awash in sewage the day you moved in.  Another apparent difficult question is ” Are you aware of an additions or alterations made without required permit and final inspection; ie building,electrical, gas?” Now as we all know many people do some work on their homes without getting permits or inspections as we all know the hassle this can be. So the question is “how do I answer this question when it is such a common practice?” The answer again is truthfully. If you did some renos without permits say so and be specific as to what they were. This is where the Property Disclosure Statement can work for the seller.. If you have answered truthfully that there were renovations done without permit or inspection it makes it very difficult for the buyer to come back to you later if there is a problem with one of the renovations. They in fact knew that this particular work had been done without permit so basically accepted that when they signed off on the Disclosure Statement.

Most Realtors will include the Property Disclosure Statement in the contract attaching it via an addendum. If the Statement is not specifically included then it does not become a part of the contract and is just a piece of paper. An attorney may argue that it can be used in a legal action but to be sure it should be included as part of the original Contract of Purchase and Sale.

Your Realtor will ask you to fill out the Property Disclosure Statement rather than them because you actually have to initial each questions answer to ensure that it is a true representation of your s knowledge of your home.

As a Realtor I find it is best to be honest with everyone right from the beginning. It prevents a lot of problems down the line.

Thanks you all for the comments and if you have any suggestions for subjects for my Blog just drop me a note at keith @iamlangley.com. Thanks again.

]]> http://www.iamlangley.com/langley-realestate-blog/what-exactly-is-a-property-disclosurre-statement/feed/ 0 What are Latent Defects http://www.iamlangley.com/langley-realestate-blog/what-are-latent-defects/ http://www.iamlangley.com/langley-realestate-blog/what-are-latent-defects/#comments Thu, 20 May 2010 19:58:40 +0000 admin http://www.iamlangley.com/?p=162 I often get questions from my clients regarding just what constitutes a Latent Defect. The question usually comes up when we are discussing the listing of their home and I mention that we must disclose all Latent Defects. Panic usually sets in and they immediately want to know exactly what they have to disclose and what they don’t.

It really isn’t that complicated.  If something in your home can not be found by a reasonable person during a routine inspection, that would be considered a Latent Defect. In other words if you had a water leak inside a wall and you had been t0ld about it by a plumber. That’s a Latent Defect. You think it doesn’t show yet and there isn’t any damage that can be seen. So you decided to sell the the home before it causesmajor damage and just not tell anyone. Caveat emptor right!  Wrong, this is a Latent Defect and you will probably be sued by the purchaser for damaged and numerous other things. In other words it is going to cost you a lot of money either way. However, the cheapest way is still to get the damage repaired and then sell the home if you still want to. Two things will happen this way. Your not worried about the knock on the door serving you papers and believe it or not, you will sleep better at night.

If you think the Latent Defect is of such a nature that it will be some time before it shows its ugly head and therefore the statute of limitations will run out and you will be home free Wrong again Sorry. The Courts have ruled that the clock doesn’t start ticking on the statute of limitations until the Plaintiff becomes aware of the problem. The bottom line is, even  if you go 5 years and don’t hear anything it could still be hanging over your head because the buyer doesn’t know yet. Again best practice is to disclose those Latent Defects now and live with the consequesnces  Again Sorry.

]]> http://www.iamlangley.com/langley-realestate-blog/what-are-latent-defects/feed/ 0 More about the new Mortgage rules http://www.iamlangley.com/langley-realestate-blog/more-about-the-new-mortgage-rules/ http://www.iamlangley.com/langley-realestate-blog/more-about-the-new-mortgage-rules/#comments Fri, 14 May 2010 20:56:09 +0000 admin http://www.iamlangley.com/?p=149 The new changes to the mortgage insurance rules came into effect on April 19,2010. The new rules are meant to cut down on speculation and encourage Canadians to use their homes as a savings tool rather than as collateral for home equity loans to pay down credit card debt.

There are three basic rule changes

1) The minimum down payment for a non owner lived in home is now 20% rather than 5% and the way future rental income may be considered has been scaled back as well. This rule change will have the most impact of all the rule changes but only to Real Estate speculators. It requires speculators to put more money down up front and being able to use less potential rental income for qualifying purposes will take many new speculators out of the market.

2) All borrowers with less than 20% down will have to meet meet qualification standards for a five year posted fix rate mortgage. This is in effect even if you want a different type of mortgage or a shorter term mortgage.

Current standards  for mortgage qualifying are typically based on the lenders three year fixed rate. this qualifying standard in the past been sufficient to protect consumers fr4om rates increasing over the term . Essentially , the government is forcing people to prepare for the likely rate hike over the next five years.

Mortgages with terms of fic=ve years or more will use the contract intersest rate. This is key because it suggests lenders will still be able to qualify insured five year fixed rate borrowers using hevavily discounted contract rates (IE 3.79% instead of 5.39% as of today.) the important thing to remember is that this rule changes only apply to mortgages over 80% loan to value. So if your putting 20% down it basically will not affect you.

3) The maximum Canadians can withdraw when refinancing their mortgages will be reduced from 95% to 90% of the value of their homes. This will affect borrowers who would like to reduce some of their high interest loans and consolidate them and use th eequity from their homes to pay them off.

]]> http://www.iamlangley.com/langley-realestate-blog/more-about-the-new-mortgage-rules/feed/ 0 What are Fixed, Variable or Adjustable Interest Rates http://www.iamlangley.com/langley-realestate-blog/what-are-fixed-variable-or-adjustable-interest-rates/ http://www.iamlangley.com/langley-realestate-blog/what-are-fixed-variable-or-adjustable-interest-rates/#comments Fri, 23 Apr 2010 01:40:38 +0000 admin http://www.iamlangley.com/?p=141 When you make that decision to purchase that first home you tend to think that all you have to do is go out and find the perfect home and the rest is easy. Nothing could be further from the truth. There are many decisions to make after you make the decision to buy THE home. One of the biggest and most important is wheather to go with a fixed or variable rate mortgage. First let me explain what the difference is. A fixed rate is locked in for the entire term of the mortgage and usually for  specific period i.e. 3 years, 5 years, etc. For the variable rate the payments stay the same but the interest rate can vary from month to month based on the market. The adjustable rate mortgage both the interest rate and the payments vary based on the present market conditions.

It is a tough  decision, which way to go, but you should make it based on all the information you can gather when you buy that home.

To give you an example of the math you do , I will give you a recent scenario. A client some time ago purchased a home for $465,000.00 and was in a quandary as to what to do about the mortgage. I suggested they at least think about a variable rate for the following reasons. At the time the variable rate was prime -.5 % or 1.75%. The fixed rate was 4.09% for 5 years. They were worried that the prime rate would start to rise which would mean the fixed rate would go up as well. It has been over a year now and the prime has not gone up and as a result their financial situation is as follows. They took the variable rate at 1.75 % at the time and their rate actually went down below prime to 1.65%. Their payments were based on the 5 year mortgage rate of 4.09% and were $1865.00 per month. However, their actual interest rate was 1.65% so it worked out this way for the year. They paid $1865 a month based on the 4.09 % and at the end of 1 year they had paid$15,822 off the principal and paid $6557 in interest and the balance was $425,927.00. If they had locked it in at the fixed rate for the same year they would have paid $5953 off the principal and paid $16,422 in interest and had a  a of $435,796.00.  So even if the market started up and they had to lock in, they have already saved a lot of money up front. For example if they wanted to keep the same payments and lock the rate in at 4.09 % they would  have knocked 3 years off the amortization period. So as you can see you have to sit down and to the math on what is best for you.

]]> http://www.iamlangley.com/langley-realestate-blog/what-are-fixed-variable-or-adjustable-interest-rates/feed/ 0 Whats’ the Difference between a Conventional and High Ratio Mortgage http://www.iamlangley.com/langley-realestate-blog/whats-the-difference-between-a-conventional-and-high-ratio-mortgage/ http://www.iamlangley.com/langley-realestate-blog/whats-the-difference-between-a-conventional-and-high-ratio-mortgage/#comments Mon, 19 Apr 2010 21:24:17 +0000 admin http://www.iamlangley.com/?p=134 Many clients ask me what the difference between a conventional and high ratio mortgage are. They hear it talked about a lot, but don’t understand the difference. Basically, the difference is the amount of down payment you’re going to put down. If you put 20% or more down you qualify for conventional mortgage. One benefit of a conventional mortgage is that mortgage insurance is not normally required, which saves you money. If you are unable to put at least 20% down then you will need a high ratio mortgage. The down side of this is that high ratio mortgages have to be ensured against default and quess who pays the premium for this insurance. The premium is based on how much you put down. The bottom line is the more you put down the less the premium. The premium is usually just added to your loan. This is convenient but it also has the effect of raising your payments and could increase the amortization period. This mortgage insurance premium is usually a surprise to buyers when they go in to look at the final figure they owe for the home they purchased. That’s why it is so important to not spend all the money you saved up when you buy that first home. Give yourself a little “wiggle” room as there is always  a little more cost than you thought.

]]> http://www.iamlangley.com/langley-realestate-blog/whats-the-difference-between-a-conventional-and-high-ratio-mortgage/feed/ 0 Municipal Tax (different from Land Transfer Tax) http://www.iamlangley.com/langley-realestate-blog/municipal-tax-different-from-land-transfer-tax/ http://www.iamlangley.com/langley-realestate-blog/municipal-tax-different-from-land-transfer-tax/#comments Fri, 16 Apr 2010 00:36:50 +0000 admin http://www.iamlangley.com/?p=99 Clients are sometimes  confused between  the Land Transfer Tax and the municipal property tax. Unfortunately they are two separate taxes that are part of your closing costs. They can be an unexpected shock when you get a call from your lawyer outlining the final amount of money you need to come up with for your mortgage. As I mentioned in a previous BLOG the Land Transfer Tax is a tax the government has put on when residential properties change hands and it is a flat percentage of the sale. 1% of the first $200,000.00  and 2% of the remainder. So this in itself can be a sizable amount. The Municipal Property tax is the yearly tax the local governments impose on the property to pay for local costs such as garbage pick up schools, fire protection, libraries , etc. This tax is based on a “mill rate” that your local council decides on. This mill rate is then applied to the assessed value of your home and that’s the tax you pay. Your taxes are affected by both the mill rate and the assessed value. There is nothing you can do about the mill rate but you can appeal the assessed value of your property.
I advise my clients about the municipal tax situation both for selling and buying a home. I don’t want any surprises for my clients.
The municipal taxes are usually due on July 01 of the tax year. So in other words, up until July 01 of the year you have been accruing a tax deficit of sorts. When you pay your taxes on July 01 you pay them for the whole year so now you have a credit, right!!. So lets assume you sell your home with an adjustment date of May 30. This means you are responsible for the municipal taxes for the time you lived in the home or 119 days. When the lawyers sit down and decide on the adjustment figures they find out how much the taxes are probably to be( if not already issued) and they then prorate the amount. So for example if your taxes due were $3344.00, that works out to 3344/365 or $9.16 per day. You lived in the home for 119 days so you will owe the new owners 119x$9.16 or $1,090.04 which your lawyer will credit to the new owner from the proceeds of the sale.
OK, now lets say you sell your home after the taxes are paid. Then you get the credit instead of the buyer. Lets assume the same home sold in September with an adjustment date of Sept 23. You have paid taxes for 365 days but only lived in the home for 235 days. Let us use the same taxe figures of $3344.00 that means you owe $9.16×235 =$2152.60 but you paid $3344.00 so you get the adjustment credit of $1191.40.
As you can see this could be a nasty surprise if a buyer or seller was unaware of how their tax situation was calculated. If you need any more information please call me at the office 604 530 0231

]]> http://www.iamlangley.com/langley-realestate-blog/municipal-tax-different-from-land-transfer-tax/feed/ 0 How Will the New HST Effect Real Estate http://www.iamlangley.com/langley-realestate-blog/how-will-the-new-hst-effect-real-estate/ http://www.iamlangley.com/langley-realestate-blog/how-will-the-new-hst-effect-real-estate/#comments Mon, 12 Apr 2010 17:36:43 +0000 admin http://www.iamlangley.com/?p=111 The new HST is officially coming in effect July 1, 2010, but the federally administered tax may already have implications in the Real Estate market.  As we all know Real Estate fees will be subject to the new HST, but what many don’t know is that they may already be subject to a partial HST payment.  It all depends on how much work was done for the client before July 1,2010. If 100% of the work was done for the client then only 5% GST is payable. if 100% is performed after July 01 2010 then 100% is paid as HST. If 90% of the work is done before July 01,2010 then only GST is paid. If 75% is done before July 01 2010 then GST is paid on 75% of the fee and HST is paid on the remaining 25%. The HST on new and substantially renovated homes ( where more than 90% of the property is involved in the reno). is the same as the present GST.  New homes priced up to $525,000.00 will be eligible for a new rebate of 71.43 % on the provincial portion of the HST paid.  New homes above $525,000 will be eligible for a flat rebate of $26,250.00 These rebate are in addition to the rebates already available under the GST.

As you can see the new HST rules are somewhat complicated and not easily understood. I for one, just don’t understand how our government can see this a s a good thing for British Colombians when it is going to keep many people from purchasing a new home. I also think it is going to have a devastating effect on the new home industry and may well push our economy backwards rather than forwards.

Thanks for reading. If anyone would like to get on my mailing list for my monthly newsletter please drop me an e mail at “keith@iamlangley.com” with your name and address and I will be happy to add your name to my list.

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