Month: October 2016

How to Amp Up The Resale Value of Your Home

Whether you’re putting your home on the market this year or in the next five years, it is a smart decision to start building your home’s resale value now. Here are some ways to create a comfortable home while making it easier to put more money into your bank account on closing day.

Small Maintenance and Repairs

If you think that home maintenance on the weekends is a low priority, think again. The small chores you do around your home prevents it from losing value. Neglecting small maintenance and repairs causes 10% of your home’s value to walk out your door and slip through your windows. Most appraisers claim that homes showing little to no preventative maintenance can depreciate from $15,000 to $20,000! Preventative maintenance can also actively increase your home’s resale value — according to a recent study, by about 1% per year! Also, because home buyers generally notice any repairs needed upon buying a new home, proactive maintenance lets the home buyer know that he or she will not have to spend extra money to maintain the basics. This makes your home more attractive, and thus more likely to get higher priced offers

Remodeling Ideas and Tips That Work

Studies show that a home valued at $150,000 could increase its value between $8,300 and $19,000 with the addition of landscaping. These studies also note that positive landscaping can reduce the amount of time your home spends on the market! Changing out the doors of your home is also generally a smart design choice. Lately, fiberglass and steel doors are a coveted aesthetic by home buyers. A steel door costs $1,335 but has a whopping 91% return on investment. A fiberglass door, on the other hand, costs about $3,126 with an 82.3% return on investment. Likewise, a new fiberglass or steel garage door distinguishes your home from the rest on your block and provides a 91.5% return on a $1,652 investment. Finally, matte paint finishes will trend in 2016 because of its transitional qualities. With a matte finish, your potential home buyer can easily match his or her stainless steel or black and white appliances. It’s touches like these that make your home appealing to a wide variety of home buyers, and that drives up its resale value.

Your Needs and Buyers’ Wants

On that note, if you need to renovate your home, be sure to consider how those changes will affect its appeal to future buyers. Knowing design trends will give you the opportunity to make changes to your home based on where your needs and your potential buyer’s desires intersect, thus increasing your property’s resale value drastically. Designers and design websites provide great ideas when you’re brainstorming home renovations. Keep in mind as you research, however,that you don’t want to sacrifice your needs for a comfortable home just for the sake of what you think a future buyer will want! Therefore, before you begin making any changes to your home, consult your real estate agent. Real estate agents, because we are constantly working with new buyer clients, have insider insight into what home buyers are looking for now and in the future. We’ll be able to help you make smart choices when remodeling or renovating your home

If you think you might want to remodel or renovate your home in the near future, or if you are just curious about other ways you can increase its resale value, please reach out to me!

 

Ottawa tightens mortgage requirements and targets foreign money

Finance Minister Bill Morneau announces new rules

A major shift in mortgage rules means that Canadians taking on loans to buy homes may not qualify to borrow as much as they previously could.

The rules announced by federal Finance Minister Bill Morneau are aimed at making sure homebuyers aren’t taking on mortgages they can’t afford if interest rates rise. The change means that all homebuyers, regardless of how much they have for a downpayment, will be subject to a mortgage rate stress test beginning Oct. 17 that has, up until now, been reserved for those with less than 20 per cent down.

The big change

Buyers with a downpayment of between five and 20 per cent – who hold what are known as high-ratio mortgages – must be backed by mortgage insurance to protect the lender in the event the homeowner defaults on the loan.

Because they are considered higher risk, those buyers must pass what’s called a mortgage rate stress test to qualify for insurance backed by the federal government through the Canada Mortgage and Housing Corp.

That stress test measures whether the buyer could still afford to make payments if mortgage rates rose to the Bank of Canada’s posted five-year fixed mortgage rate.

That rate is usually significantly higher than what a buyer can negotiate with banks or other lenders. For instance, TD has a five-year fixed rate mortgage at 2.59 per cent, while the Bank of Canada’s rate is 4.64 per cent.

The stress test also sets a ceiling of no more than 39 per cent of household income being necessary to cover home-carrying costs such as mortgage payments, heat and taxes.

Until now, buyers with more than a 20 per cent downpayment have escaped such scrutiny.

The federal government says it’s responding to concerns that sharp increases in housing prices in Toronto, Vancouver and elsewhere could increase defaults in the future, should historically low interest rates finally start to climb.

Other changes

The government is also instituting changes aimed at foreign buyers, big banks and lenders and mortgage insurance on homes valued at more than $1 million.

As it stands, those buying a home with more than 20 per cent down could obtain low-ratio insurance to protect the loan against default. That insurance is sold through two private insurers, but is backed by the federal government, subject to a 10 per cent deductible.

Beginning Nov. 30, new criteria will be in place governing the low-ratio insurance. To qualify, the mortgage’s amortization period must be 25 years or less, the purchase price must be under $1 million, the property must be owner-occupied and the buyer must have a credit score of 600 or more.

The new rules also mean that, beginning this tax year, all home sales must be reported to the Canada Revenue Agency. The gains from sales of primary residences will remain tax-free, but the government is aiming to block foreign buyers from purchasing and flipping homes while falsely claiming the primary residence exemption from capital gains tax.

Finally, the government says it will shift some of the risk of defaults against insured mortgages to banks and other lenders. Ottawa says its shouldering 100 per cent of the cost of a defaulted mortgage is “unique” in the world. How the government plans to share some of that risk with lenders remains to be seen. But experts say, while it protect the government from widespread defaults, it could lead to higher interest rates for borrowers.

It will be interesting to see the impact of these measures on our super-heated market. Please post and share your thoughts!