Check Your Credit Report

Everyone who's ever borrowed money to buy a car or a house or applied for a credit card or any other personal loan has a credit file.
Because we love to borrow money, that means almost every adult Canadian has a credit file. More than 21 million of us have credit reports. And most of us have no idea what's in them.

Are there mistakes? Have you been denied credit and don't know why? Is someone trying to steal your identity? A simple check of your credit report will probably answer all those questions. And it's free for the asking.

What's in a credit report?

 Each of the accounts includes a notation that includes a letter and a number. The letter "R" refers to a revolving debt, while the letter "I" stands for an instalment account. The numbers go from 0 (too new to rate) to 9 (bad debt or placed for collection or bankruptcy.) For a revolving account, an R1 rating is the notation to have. That means you pay your bills within 30 days, or "as agreed."

What is a credit score?

A credit rating or score (also called a Beacon or a FICO score) is not part of a regular credit report. Basically, it's a mathematical formula that translates the data in the credit report into a three-digit number that lenders use to make credit decisions. 

 The numbers go from 300 to 900. The higher the number, the better. For example, a number of 750 to 799 is shared by 27 per cent of the population. Statistics show that only two per cent of the borrowers in this category will default on a loan or go bankrupt in the next two years. That means that anyone with this score is very likely to get that loan or mortgage they've applied for.

 

How to get a copy of your credit report and credit score?

There are two national credit bureaus in Canada: Equifax Canada and TransUnion Canada. 

 For TransUnion, the instructions to get a free credit report by mail are available at:

https://www.transunion.ca/personal/credit-report

For Equifax, the instructions are at:

https://help-en.equifax.ca/app/answers/detail/a_id/300/noIntercept/1

Mortgage-Backed Securities

Mortgage-backed securities are pools of residential mortgages that have been securitized – that is, grouped together and resold to institutional and private investors. These securities trade in the
secondary market. Introduced in 1986, MBS issues have become a routine part of the mortgage industry.

Canada Mortgage and Housing Corporation (CMHC) is the main creator of mortgage-backed securities in Canada, although private companies may issue them, too. CMHC guarantees the payment of interest and repayment of principal on its issues.

Similar to the underlying mortgages, these pools can be closed (which means that no prepayments, or the opportunity to pay off the mortgage before maturity, are allowed) or open (prepayments are allowed, which increases the risk to the investor).

Most common are the five-year pools that are denominated in multiples of $5,000. MBSs earn returns that are comparable to GICs and are typically higher than Treasury bills or other
Government of Canada bonds with similar terms.

With consistently low mortgage rates over the last five years, variable-rate mortgages and adjustable-rate mortgages have gained considerable popularity with home buyers. This has led to
an increase in the demand for products offering variable-rate and adjustable-rate mortgages.

Mortgage-backed securities are attractive to income-oriented investors since investors receive a cheque every month. Although they are low risk, since most are guaranteed by CMHC, investors
should be aware that liquidity in the secondary market for certain issues can be poor.

Gross Debt Service Ratio and Total debt service ratio

How the banks calculate how much house you can afford They use GDS and TDS Gross Debt Service (GDS): The percentage of the borrower’s income that is needed to pay all required monthly housing costs (mortgage payments, property taxes, heat and 50% of condo fees). Total Debt Service (TDS):  The percentage of the borrower’s income that is needed to cover housing costs (GDS) plus any other monthly obligations that an individual has, such as credit card payments and car payments.  The acceptable ratios for both have generally been 32% and 40% respectively. For people with very high credit scores, GDS requirements are often waived and the TDS maximum is slightly higher (44% as of January 2011). GDS RATIO (Gross Debt Service Ratio): The percentage of gross annual income required to cover payments associated with housing. Payments include mortgage principal, interest, property taxes and sometimes include secondary financing, heating, condominium fees or pad rent. TDS RATIO (Total debt service ratio): The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations, such as car loans and credit cards.  Example - GDS - Gross Debt Service Ratio Monthly mortgage payment:  (principal and interest)* $1,191.84 Property taxes: (monthly) $150.00 Heating costs: (monthly) $105.00 Other:** $50.00 Total monthly payments: $1,496.84 Gross monthly household income: $6,000.00 GDS = Total monthly payments  (x 100)            Gross monthly income   GDS = $1,496.84  (x 100) = 24.95%            $6,000.00    * Principal and interest must be based on the total insured loan amount, including CMHC insurance premium (if you choose to add the premium to your mortgage and not to pay the premium up front).  Mortgage payment is based on a $200,000 mortgage, 5.25% interest rate, 25 year amortization. ** If you are purchasing a condominium, you must include 50% of the monthly condominium fee.  If the mortgage is for a mobile home (chattel mortgage) include 100% of the monthly site (pad) rent.   Example - TDS - Total Debt Service Ratio Total monthly housing payments:  (from GDS calculation):* $1,496.84 Other debts:  (personal loans, car loans, credit cards, etc.):  $350.00 Total monthly debts: $1,846.84 Gross monthly household income: $6,000.00 TDS = Total monthly payments  (x 100)            Gross monthly income   TDS = $1,846.84  (x 100) = 30.78%            $6,000.00

Real Estate Bidding Process

In a bidding war, the terms of all offers are kept confidential between the seller, their agent and each individual buyer and their respective agent. 

All offers are usually presented separately, but in one session, and normally in the same order as they were registered with the listing brokerage. The seller's agent should allow each buyer rep to present their client's offer. By doing so, the seller's agent can question the buyer agent about their client's offer and obtain valuable information to assist the seller to fairly compare and choose wisely between the multiple bids.

After an individual presentation, the buyer agent is asked to leave the presentation room, with the listing agent retaining a copy of the offer. Each buyer agent is permitted the same opportunity and this continues until all competing bids have been presented.
Then, with the guidance of the listing agent, with a copy of each of the competing bids spread before them, the seller makes a decision. Typically, but not always, the seller will be advised to return all offers to the respective agents with the instruction to ask their buyers to ...

Improve Their Offers

Thus, everyone is given a second chance. And when all offers are re-registered, the entire process begins again. After consultation with the listing agent, the seller usually accepts what they perceive to be the best offer.

Aside from increasing the offer price, there are other  Options Available to a Buyer

... to increase the attractiveness of their offer. If a buyer is comfortable with doing so, conditions may be removed from their offer, a closing date altered to comply with a seller's preference, chattels could be excluded, seller requirements eliminated or deposits increased. Usually, though, it comes down to ... 

Conditions and Price

Sometimes, the seller may simply reject what they perceive to be the worst offers and work with only the top few. A seller may retain some offers, provided the irrevocable dates allow it, and counter-offer to that buyer. If that buyer accepts that seller offer, the deal is done. If not, the seller may counter the next one, being wary of irrevocable dates and times to avoid the possibility of committing to more than one buyer. A seller will usually continue this process until one is accepted by a buyer.

 

Tenants and Landlords at Selling a Condominium

When landlord wants to sell property, co-operation with tenant is necessary. Here are some rules

When a landlord puts a home or condo up for sale it can often lead to conflicts with tenants. The landlord, naturally wants to show as many people through the property as possible, while the tenants may be annoyed with the inconvenience. Each party has rights and it pays to know what they are.

Here are the basic rules:

•Landlords can sell their home at any time.
•If the tenant has a lease, they cannot be evicted before the end of their term.
•If the lease is over, it automatically becomes a monthly tenancy. The tenant must be given 60 days’ notice to vacate, provided that a buyer has already unconditionally agreed to buy the home.
•Tenants must allow buyers to look at the unit, as long as there is 24 hours’ advance written notice and the showing takes place between 8 a.m. to 8 p.m. Pets have to be kept out of the way and while tenants can be there during showings, they don’t have to be.

Some tenants believe the landlord cannot show the home if they still have a lease. Wrong.
On the other hand, a buyer must still respect the terms of the lease. But when the lease expires, the new owner can provide a 60 days’ notice based on the fact they need the home for themselves or their family.

If a tenant refuses to let buyers in to see the unit after being given proper notice, the landlord can start eviction proceedings. The landlord could also potentially claim damages if the tenant’s actions prevent the landlord from selling the home in a timely manner.

If you are planning to sell your home, my advice is to approach your tenant first and work out a plan that accommodates everyone. That way the tenant can protect their valuables and keep pets out of the way and the landlord can let buyers see the home on a timely basis. As an example, only agree to showings from 4 to 6 pm each day.

Some landlords help their tenants find another place to live before putting the home up for sale. This is also an excellent solution. It takes away the stress of eviction and the landlord then gets to later fix up their home and make it more presentable to a wider range of potential buyers.

When landlords and tenants understand the rules and co-operate when a home is being sold, everyone wins.

MPAC and Teranet

MPAC

MPAC (mpac.ca, AboutMyProperty.ca™, propertyline.ca) is a not‐for‐profit corporation funded by all Ontario municipalities.

MPAC is responsible for administering a uniform, province‐wide property assessment system based on current values. MPAC assesses nearly five million properties with a total value of $2.2 trillion.

MPAC provides a range of services, including the preparation of annual assessment rolls for use by municipalities and the Province of Ontario to calculate property taxes and education taxes.

 MPAC also delivers  products and value‐added services to a number of sectors including banks, mortgage firms and other assessment jurisdictions across Canada. propertyline™ is a secure e‐commerce solution for obtaining accurate, real‐time property information quickly and easily.

With propertyline™, customers can purchase assessment, site, structural, and sales data on all types of properties across Ontario. Information is refreshed weekly to ensure customers have access to the most current property information.

Teranet

Founded in 1991, Teranet owns and operates Ontario’s Electronic Land Registration System, one of the world’s most advanced land registration systems, enabling users to conduct electronic registrations as well as title and writ searches relating to real property.

Teranet also owns and operates The Property Registry in Manitoba, providing advanced land and personal property security registration and search services.  Teranet’s comprehensive suite of related data products have fundamentally increased the real estate industry’s ability to provide efficient and secure services to the public.

Teranet has built a well‐established customer base and strong brand confidence, providing electronic services to over 81,000 end users including lawyers, paralegals, real estate brokers and agents, search houses, title insurers, financial institutions, governments, police services, utilities, surveyors, credit unions, investigators and appraisers.

Teranet is managed by Borealis Infrastructure, a leader in direct infrastructure investing with well over a decade of investment experience.

With offices in Toronto, London, New York and Sydney, Borealis is the infrastructure investment arm of OMERS, one of Canada's largest pension funds with net assets of more than $65 billion and an AAA credit rating.

As at December 31, 2013, Borealis manages net assets of approximately $11.6 billion on behalf of OMERS through investments in a diversified portfolio of large‐scale infrastructure assets exhibiting stability and strong cash flows, in sectors including energy, transportation and social infrastructure. For more information about Teranet, visit www.teranet.ca.

Toronto Real Estate sales for 2015

Residential 
Toronto home sales were the second-best on record in December of 2015, with the Toronto Real Estate Board posting 4,945 sales. The year’s total sales were 101,299, which is a 9.2 increase over 2014.

The average price for a home in Toronto in 2015 was $622,217, which is up by 9.8 per cent compared to 2014, when the average price was $566,624.

Commercial

According to the Toronto Real Estate Board’s Commercial Network Members, there was a 6.1 million square foot increase in leased office, commercial and industrial space during the fourth quarter of 2015 compared to the same time in 2014, a 19.6 per cent increase.

The number of sales of commercial, office, industrial spaces decreased by 27 per cent in the fourth quarter of 2015 compared to the same time in 2014, for a total of 235 sales.

In mid-December, the government of Canada announced that it was increasing the required down payment amount for some home purchases beginning in February 2016

Homes priced above $500,000 will now require a down payment of 10 per cent instead of the previous 5 per cent. Homes priced below this amount still only need a 5 per cent down payment.

CMCH Fee Changing

The Canada Mortgage and Housing Corporation has announced it is changing the guarantee fees being charged to issuers and adjusting the annual limits for new guarantees. Both National Housing Act Mortgage-Backed Securities and Canada Mortgage Bonds are affected.