Moving to YYC: How to buy ASAP
Moving to Calgary and Buying a Homes As Soon As Possible
This is a common question, and as usual, the way the banks / lenders want things done is exactly the opposite of what works in real life, for real people, like you.
You Want: To buy a home in Calgary, move the family in, get settled and then start the new job – RIGHT! That makes the most sense.
The Lenders want:
- You to have 1 full-cycle payslip BEFORE then will fund your mortgage and
- You to be completed the 90 day probation if you have a probationary clause in your new employment
Why?
PAYSLIP: The first full-cycle pay-slip – meaning 2 full weeks of pay – critically needs to match your employment letter / job offer at 40.00 hours; or whatever it is that you are guaranteed for pay. If it does not match, then your income is not guaranteed, and the lenders want to see guaranteed pay.
39.97 hours is not 40.00 hours; it means the 40 hours is not guaranteed and the lenders often decline to fund your mortgage.
PROBATION: In Alberta, you can be let go for no reason in the first 90 days of employment – even if you are NOT on probation. It does not matter if there is/not a reason, it is the law.
Obviously, if you just moved here, bought a home and are let go, the odds of you moving back are high. And the bank is left in the risky position of losing money on the home or making an early CMHC claim. Which is why they want to see either: NO probation, or a shortened & completed probation period, or a completed probation period.
Work-Arounds:
- Workaround 1: We recommend and often see new employees specifically asking for no or short probation periods. You are taking the risk moving here, the employer is often willing to waive the probation – which can be the key to speeding a home purchase.
- Workaround 2: Depending on how your math works out, you may be able to carry 2 mortgages at 1 time. There are 2nd Home Programs that can work for situations like this, but again, the math is different for everyone.
How to make the move as smooth as possible
The smoothest way to buy a home when relocating is to start the job first. Ask for the employer to waive or shorten the probation period. Then rent, stay with friends, or anything that works for the first 2 or 3 weeks. Then when you have a full-cycle pay slip you can buy a home that works for you and take possession as soon as possible is a much smoother transaction. Otherwise you are “trying to push a rope up a hill” and the bank’s don’t like that at all.
We see issues with people buying too soon all the time. Forcing the system often backfires on new home owners. The resulting brain damage is not worth trying to do the transaction backwards in the eyes of the banks.
Mark Herman; top Calgary Alberta Mortgage Broker, with best rates
RBC: Mortgage Mistakes
RBC made what I think are some some pretty serious – and costly – mistakes for their customers and it is too bad … for the customers!
My 2 favorite quotes from this article are:
“My husband and I both felt pretty robbed,” she said. “I feel … it was deceptive.”
and
“Based on his reading of it, the tone of the bank’s letter to affected customers is “probably an attempt to avoid litigation, because if they took the opposite position then people would be owed money,” he said, noting the letter falls well short of an apology or acceptance of responsibility.
“There is no particular offer … to compensate or provide a small amount of money as a token of having made a mistake,” he said.”
Here is the full article:
“Always get mortgage advice from a full-time, professional, mortgage broker”
Mortgage Mark Herman; Calgary, Alberta top rated mortgage broker.
Your Banking Relationship: They leverage your mortgage to rake in credit cards profits.
Below is part of an article where the bank is sad their mortgages are down 500% from last year. At the same time they made 16% more from ramming credit cards and Lines of Credits down their mortgage customer’s throats so it’s all okay in the end. For them… and how about for you?
The blue part shows that mortgage is the key to create what customers feel is a “relationship” with the bank so they can then sell you all their high margin products.
Broker lenders only “sell” 1 thing, mortgages, so consider separating your banking and your mortgage and get the best mortgage possible – through a broker lender.
“Having your mortgage at your bank is only convenient for them to rake it in off of your credit card fees.”
Mark Herman, top Calgary mortgage broker
Here is the article:
Bloomberg News, Doug Alexander, August 23, 2018 …
Canadian Imperial Bank of Commerce’s prediction of a mortgage slowdown has come true…
Despite the mortgage slowdown, CIBC posted a 16% jump in Canadian personal and commercial banking earnings due to a “significant” expansion … and growth in credit cards and unsecured loans amid rising interest rates, Chief Financial Officer Kevin Glass said.
“Those would be the major offsets in terms of mortgage growth declining,” Glass said in a phone interview. “Mortgages are a key product for us — it’s very important from a client relationship perspective — but it’s not a high margin product, so if mortgages come off it has a far smaller impact than rate increases do, for instance.”
Brokers vs. Banks – The Differences
Love it when the newspapers do the telling for us.
Almost 40% of all mortgages are via brokers now. Up from 25% 15 years ago. There is a reason to use a broker that has been in business for 15 years or longer, like Mortgage Mark Herman of Mortgages Are Marvellous.
https://www.thestar.com/life/advice/2018/07/31/mortgage-brokers-vs-banks-the-pros-and-cons.html
Prime rates should go up in July
This only affects variable rate mortgages and there are 2 increases to Prime expected for 2018, this one and one in December – depending on how the economy goes.
- The Bank of Canada is expected to raise interest rates on July 11th.
- They normally increase Prime by 0.25% at a time, Prime is 3.45% now and should then go to 3.70%.
- The Central bank also emphasized that the increase will be needed to contain inflation.
This makes the 5-year fixed rates look much better as rates are slowly going back to 4% – the Theoretical Minimum
Mark Herman, Top Calgary Alberta Mortgage Broker
Some will wonder what stopped the Bank of Canada from raising interest rates today. It does seem likely that policy makers struggled with the decision, as they had little bad to say about the economy.
The reason for the delay is the same as it’s been since the start of the year: U.S. President Donald Trump. Canada’s central bank remains concerned that U.S. trade-and-tax policy will weigh on Canadian business investment, so much so that it is prepared to risk a little inflation by waiting for more clarity.
Few thought the central bank would raise interest rates on May 30. Poloz had been clear that he was comfortable with inflation running a little faster than the target rate of 2 per cent. He also said last month that hard evidence on investment would be a crucial variable and no such information has yet been published.
The central bank had been wary that its three interest-rate increases since last summer would choke domestic spending. But households seem to be coping just fine, which means the Bank of Canada can resume pushing interest rates higher.
Here is the link for the entire article: http://business.financialpost.com/news/economy/bank-of-canada-holds-interest-rate-at-1-25
The Details: What you need to know about “discount mortgages.”
Grandma always said, “The price is the price, but the details are the details!”
There are discounted and restricted mortgage rates out there but they do not share the details of their disadvantages up front with you.
- Restricted or Limited Products / Bait & Switch
People will not even sign a 3 year cell- phone contact any more but they will try to save $15 a month on a restricted mortgage; which could cost them $30,000 as a payout penalty – BUYER BEWARE is what the regulators say.
Brokers often advertise these products to get you to call them and then they switch you into a “regular product” if you are lucky – or you get a “restricted product” that you probably do not want if you know all the details.
Discount mortgages called “limited” or “restricted” and often have:
- No rate holds
- Only monthly payments
- Only 1 statement a year
- No on-line administration = call centre only
- Only 5/5 extra repayment option – most broker lenders are 15/15 + 2x or 20/20
- The 1st number is the % of the original mortgage amount you can repay every year without penalty
- The 2nd number is the increase in monthly payment in % you can do without penalty.
- The 2x = double the payment!
- And they use the bank payout penalty calculations – as below in the Dirty Trick – AND in addition to that penalty, a 3% fee of the entire mortgage balance added to the penalty!
- This could easily end up at $30,000.
The other main “Details” that are not often disclosed are:
2.Collateral Charge
To keep you from leaving the bank for a lower rate when you renew later, the banks register your mortgage as a collateral charge – which is the same as an “I owe you” / IOU for the home. Other banks will not take another banks IOU for a mortgage; which means:
- A lawyer will have to re-register your mortgage at land titles; $1000.
- An appraisal is needed as the registration is usually for more than the value of the home; $450
- http://blog.markherman.ca/?s=collateral
- This means on renewal you will not get the best rates because it will cost you about $1500 – $2500 to move banks – even after your term is over.
3. The “Dirty Trick” of how the banks calculate your payout penalty
- If you have to move or break your mortgage the payout calculation is usually way lower at a broker-only bank than any of the big banks. The big banks all calcualte the penatly the same way now – to their advantage, not yours.
- http://blog.markherman.ca/2015/08/26/payout-penalties-how-the-big-5-banks-get-you/
To avoid these products, or to disucss what your personal situation may be, call us any time at 403-681-4376.
Mark Herman, Top Calgary, Alberta, mortgage broker for renewals, first time home buyers and home purchases.
Graph shows why mortgage rates may go up soon
We watch all kinds of indicators for when mortgage rates may change.
This is the main one, the CMB – Canadian Mortgage Bond. As you can see it is on the way up and mortgage rates and the graph are directly related.
Rate Watch Program
When rates go up the banks call us and give us at least 2 hours – and sometimes 2 days – notice. This lets us send in all the files that we are working on for 120 day – or 4 month – rate holds. All the files that have enough data in them – at least an application and the disclosures and a payslip – get rate holds at today’s rates.
The banks do not do this for you! Another reason to use a broker that works the system to your advantage at no cost to you!
Mark Herman, top Calgary Alberta mortgage broker for new home purchases and mortgage renewals.
Calgary outpaces province
Single-family home construction starts in Calgary and area hit 3,085 in the first six months of 2013
Photograph by: Files , Calgary Herald
Construction starts of single-family homes during the first half of 2013 in the Calgary area were the highest of all urban centres in Alberta — outpacing activity from a year earlier, says a federal agency.
Construction starts from Jan. 1 to the end of June reached 3,085, up nine per cent from 2,830 during the same time in 2012, says Canada Mortgage and Housing Corp.
The starts occurred in the Calgary census metropolitan area, which includes outlying communities such as Airdrie and Cochrane as well as the city.
The second-busiest centre from Jan. 1 to the end of June was the Edmonton census metropolitan area at 2,800, up eight per cent from 2,595 starts during the same period last year.
In terms of the Calgary area, “(single-family) home construction for the first half of 2013 has been fairly steady,” says senior market analyst Richard Cho of CMHC. “We’re seeing some economic factors that are supporting housing demand.”
Among those factors are employment opportunities, he says.
“In 2012, we had an impressive number of jobs created,” says Cho. “We had a record number of net migrants come to Calgary as well — and, of course, that will lead to a higher demand for housing.”
Net migration refers to the inflow of people to the Calgary area minus the outflow.
Last month, 554 single-family homes broke ground in the Calgary area, a 4.3 per cent improvement compared to 531 starts during the same month last year.
But for the month of June, construction starts of single-family homes in the Edmonton area were tops in Alberta at 589, up 13 per cent from 522 starts during the same month in 2012.
Total single-family housing starts for all urban centres in Alberta improved from Jan. 1 to the end of June 2013 compared to a year earlier.
In this span, 7,736 homes broke ground, up 11 per cent from 6,973 starts during the same period in 2012.
OVERALL TOTAL DECLINES
While construction starts of single-family homes in the Calgary area last month were up from the same time in 2012, total new home construction was down, says a federal agency.
Housing starts of all kinds — including multi-family development — eased to 912 in June, down 30 per cent from 1,184 during the same month in 2012, says Canada Mortgage and Housing Corp.
Visit cmhc-schl.gc.ca
Did the Flood Frustrate Your Real Estate Contract?
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This is a repost from my good lawyer friend Jeff V. Kahane as he and I have had many questions about it. Did the Flood Frustrate Your Real Estate Contract? |
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We’ve all seen the horrific images over the past weeks of those directly affected by record flood waters. What we haven’t seen reported in the mainstream media is those who have been directly impacted by virtue of having bought or sold a property, and settling on a possession date during or after the flood. |
Alberta almost at 4,000,000 people – they have to live somewhere
Paula Simons column in the Calgary Herald this weekend entitled “ Population Growth will Change Alberta forever” is, without a doubt, an interesting read.
The article states “Last year alone, Alberta welcomed almost 200,000 new arrivals (198,285 to be exact). Most fresh Albertans came from other parts of Canada more than 110,000.”
Paula continues the article “That breakneck pace isn’t slowing. In June, Statistics Canada reported an estimated 26,714 people moved to Alberta from other parts of Canada in the first quarter of 2013”
All of this will keep the Alberta housing market alive and rising as all these people have to live some where. The rental vacancy rate in Calgary is now less than 1%. Expect prices to rise due to the demand.
Population growth will change Alberta forever
No one is quite sure exactly when our provincial odometer will tick over, but some time in the next few weeks and months, there will be four million people living in this province.
Our current estimated total population is 3,965,339. That means we only need a population increase of 35,000 to reach four million. Of course, in a year, some people leave the province. Some die. Still, given Alberta’s annual growth rate of 3.2 per cent, by far the highest in Canada, we’re on track to hit 4.1 million residents by this time next year.
By way of comparison, British Columbia’s current population is 4.6 million.
“It’s a benchmark,” says Todd Hirsch, ATB Financial’s chief economist. “We’re going to require some time to think of ourselves as a province of four million people.
“This is no longer your grandfather’s Alberta. At these current growth rates, Alberta will surpass British Columbia by the year 2020.”
“The momentum is ours, because of the jobs and economic activity we have here,” says Alberta Finance Minister Doug Horner. “Frankly, four million is a big number. But we’re going to hit the five-million mark sooner than most people think — before 2020. No doubt there’s going to be a shift in the way Albertans think about their future.”
Frank Trovato is a professor of demography and population studies in the University of Alberta’s department of sociology.
“A milestone of four million is not insignificant for people, for their sense of self,” he says.
“Growth means more influence from a cultural, political and economic perspective,” Trovato says. “I think, as a province, we are developing a greater sense of who we are, a greater sense of our own importance.”
In truth, we’ve long thought of ourselves as a province of three million or so, fourth place in Confederation. But we may have reached both a demographic and a psychological tipping point.
Last year alone, Alberta welcomed almost 200,000 new arrivals — 198,285, to be precise. Who were they, exactly? The answer may surprise you.
In 2012, Alberta saw a record number of immigrants: 35,764, from some 200 different countries, with the largest number coming from the Philippines, India, China and the United Kingdom.
Alberta also produced a record number of babies last year — a bumper crop of 52,398.
But most “fresh” Albertans came from other parts of Canada. In 2012, more than 110,000 people migrated from other provinces to this one.
That breakneck pace isn’t slowing. In June, Statistics Canada reported an estimated 26,714 people moved to Alberta from other parts of Canada in the first quarter of 2013. In the same quarter, another 13,276 left Alberta — we’re a province in flux. Still, that gave us a net interprovincial gain of 13,438 — one of the highest quarterly gains Alberta has seen in the last 20 years.
The majority of new arrivals, whether from abroad or another province, are young — between 18 and 44, in their prime child-bearing years. Indeed, last year, Alberta actually “produced” almost 10,000 more babies than British Columbia.
IT consultant Karen Parker, 35, and her husband Dan Sameoto, 34, a professor of mechanical engineering, are a case in point. She’s from Hamilton, Ont. He grew up in Dartmouth, N.S. They moved to Edmonton three years ago from Vancouver, after Sameoto got a job at the U of A. Their son Robert was born here one month later. Three weeks ago, he was followed by a very fresh Albertan, baby sister Charlotte.
How is life in Alberta? “It was definitely a big adjustment for us,” says Parker. “I actually didn’t know how to drive when I moved to Edmonton! But we love the city. We love our neighbourhood. We love our quality of life. It’s also a super family-friendly city. There’s so much to do with kids here. We’re not going anywhere else, any time soon.”
The demographic shift Parker and Sameoto illustrate is reshaping our province in profound ways, changing our political and social culture, transforming what it means to be a “typical” Albertan.
“We are becoming more diverse, culturally and ethnically,” says Trovato, “and much more urban.”
Is this remarkable growth good news? Bad news? Something between? Certainly, our extraordinary demographic trend stands to gobble up agricultural land, tax our watersheds, strain our electrical grid, our freeways, our schools, our hospitals.
Keeping pace isn’t easy. Yet just as economic prosperity drives population growth, population growth itself helps to fuel the economy, creating more demands for goods, for services, for housing.
As we close in on the four-million mark, as we plan for five million, we must find ways to balance the demands of growth with the needs of our community and of our environment, ways to reform our political institutions to reflect more fairly our new demographic realities.
It’s time for us to lose our inferiority complex, that chip on our shoulders. Time for us to prepare for a new role, and new destiny.
Paula Simons is an Edmonton Journal columnist.