Tuesday, September 27, 2011

Fixed vs. Variable

I am big proponent of variable rate and here’s why:

Why go variable?
1.)   Statistics, Statistics: BMO says variables have been cheaper 83% of the time
2.)   Lower Penalties: People often break their mortgages early, for various reasons (including refinancing, selling, divorce, moving to a mortgage with a better rate/more flexibility, etc.). Most variables let you escape your contract with a 3-month interest penalty, whereas fixed rates can hit you hard with interest rate differential (IRD)—even if rates stay relatively flat (many people don’t know that).
3.)   Less Rate Risk: Compared to prior economic recoveries, economists believe that it won’t take as many rate hikes to cool Canada’s overleveraged slow-growth economy this time around
4.)   Slower Rate Hikes: The U.S. Fed has pledged to remain on hold till 2013. Moreover, TD says: “The Bank of Canada has repeatedly noted that there are limits to how much Canadian short-term rates can diverge from those in the United States."
5.)   A Free Option: Variables let you lock in anytime for free.(i.e., lock in if rates drop further, or lock in if rates look like they’ll blast off), you can do it for free in VRM…but not in a fixed.
6.)   Fixed Payments: Some lenders let you fix your payments so that they don’t move when prime rate moves.
7.)   Payment Matching: When variable rates are lower than fixed rates, you can increase your variable payments to match a 5-year fixed payment.
8.)   Timing is Futile: The problem is, knowing short-term rates doesn’t help you predict long-term rates, and the majority of mortgages are 3+ years.

Friday, September 23, 2011

Buying a Home? Get the Facts on HST

Consumers buying a resale home do not pay HST on the purchase price of the home.

In addition to not having HST on resale homes, a refund of Land Transfer Tax of up
to $2,000 is available to first-time home buyers of resale homes.

On the other hand, if you are buying a newly constructed home, HST will apply.

Enhanced new housing rebate:The new housing rebate would be enhanced so that new homes purchased as primary residences across all price ranges would receive a rebate of up to $24,000, while continuing to ensure that, on average, new homes priced up to $400,000 would not be subject to additional tax compared to the retail sales tax (RST) currently embedded in the price of new homes. For new housing, additional tax only applies to the portion of the price above $400,000.

Qualifying housing would include substantially renovated housing, co-operative housing, owner-built housing, housing on leased land, mobile homes and modular homes for use as primary places of residence.

Quick fact: 75 per cent of new homes sold in Ontario are under $400,000 and would not be subject to an additional tax amount, on average, compared to the current retail sales tax (RST) embedded in the price of new homes.

Tuesday, September 20, 2011


Hello blog readers:

It has been a great week so far...

Two deals have been firmed up: 2 bd condo in Toronto and a semi-detached house in Brampton. 

I have attached pictures below.

I am very happy for my first time home buyers.

Anyways, until next week ...