Thursday, May 10, 2018

Posted Rates – How Do They Affect My Mortgage?

Hopefully you are enjoying the spring weather that has finally arrived  .  You may have heard in the news over the past few weeks that some of Canada’s chartered banks have increased posted rates on their mortgages. These were generally accompanied by a call to action to get locked in before rates go up!  But what exactly does this increase in posted rates mean for you as a borrower? Today, we are going to cover what you need to know so you can be an informed shopper!

What Exactly Is a Posted Rate?
A posted rate is essentially the mortgage rate that the banks and other lenders publicly announce.  It got its name literally from how banks post their mortgage rates on the wall within the branch. Back in the pre-technology days, that was one of the only ways for borrowers to figure out how much interest rates wereto walk into the branch to check out the rates posted on the wall!

Are the Posted Rates What I Should Expect to Pay as a Borrower?
No, definitely not. Posted rates are usually inflated by 1-2%. To give you an example, on May 9, 2018, on a 5 year fixed mortgage, BMO has a posted rate of 5.19% and a best rate of 3.29% (as per Now, not everyone can qualify at best rates but you see the significant spread.

Why Do Banks Have Posted Rates Then?
For profits! It sounds bad, but essentially it’s a bit of a game where the bank hopes that borrowers aren’t financially savvy. If you don’t shop around you may not know what market interest rates are and are less apt to negotiate. Plus, it gives them room to negotiate a “discount” (Ie they offer you 1% below posted rates and you think that is a deal but 2% below their posted rate is easily attainable in the market).  One other major reason to note is that mortgage penalties on fixed rate mortgages are usually calculated using a complicated interest rate differential formula.  For example: say you were breaking your mortgage and the interest rate is currently 5%, but rates have since gone down and now the interest rate is 4%. Therefore, the bank has an interest rate differential of 1% that they are missing out on so will charge you the difference by way of your mortgage penalty. But these interest rate differentials in your mortgage contract usually compare posted rates with your discounted rates, and usually because of this 1-2% artificial spread, the interest rate differential can be quite large, equating to penalties of thousands of dollars.

What Else Should I Know About Posted Rates?
Now that the government has implemented stress testing for mortgage qualifications in Canada (click here for more info on the topic), posted rates do have an impact on the mortgage amount you can qualify for. So these increases in Bank posted rates have resulted in the Bank of Canada raising their qualifying rate. This is the main effect from the posted rate increases. If you were planning on buying something later this year and were bumping up into the maximum mortgage amount you qualify for, this may negatively affect your ability to buy in the same price range as before.

The next time you hear about banks increasing posted rates, now you know what it means for you. It doesn’t necessarily mean interest rates on your mortgage are increasing. Always read beyond the headline!

Thursday, April 26, 2018

Real Estate Insider: April 2018 News Report

Welcome back, readers! We hope everyone has been enjoying the weather now that spring has finally arrived. We've found some hot topics and informative blogs for you to read in between any yard work this weekend. Grab some coffee as we have a look at the perfect house to raise a family in, the marijuana commercial real estate boom and more in this issue of the Real Estate Insider!

AirBnB has become more and more popular. It could potentially be a good way to earn a little extra cash, but only if you do your homework! Read here for tips and how to calculate your return on your potential AirBnB property. >>


Whether you are for or against the legalization of marijuana, you can still reap the rewards in ways other than buying it! Read how here. >>


Do you have mortgage insurance? You may want to think twice! Here are 5 reasons to go a more traditional route. >>


There is a stigma behind “Capital Gains Tax” that seems to rub everyone the wrong way, but broken down it can be seen it is one of the more fair taxes out there! Read more here. >>


Everyone is going green, you should too! And if you start with this smart thermostat, there is no cost! >>


One of the most powerful financial tools to help grow your wealth is leverage. So you should be using leverage whenever possible, even on home renovations! Learn how this couple used their leverage on their home renovation to maximize rewards and stretch their budget further. >>


The Financial Samurai walks you through their idea of the “Ideal” house to raise a family, everything from layout to bedrooms to which direction to face! Check it out here. >>


What to do when facing ‘renoviction’. >>


Are you in the market for a mortgage? Read here why variable rate mortgages are the better deal right now. >>

Thursday, April 19, 2018

Tax Time 2018: Reminders For Anyone Who Owns Property & Files Taxes In Canada

Well, it's mid April and the weather is (finally) starting to break. This means tax season is in full swing and hopefully most of you have finished your bookkeeping and begun meeting with your tax professional. Today we are going to share a couple real estate related reminders that may apply to your tax situation this year.

Reporting the Sale of Your Principle Residence
Up until the end of 2016, when you sold your personal residence, you didn’t have to report the sale on your tax return. In 2017, this rule changed; going forward you are required to both report any principle residence sale and to designate which property (if you own more than one) is your principle residence. For more info on this check our past blog post of the subject here.

Home Office Expense
Are you self employed? Do you have a home office? You’re most likely entitled to a deduction related to this. To use an example: Say you own a home that is 1000’ and you use one of the bedrooms exclusively as a home office and it's 100’. Therefore, 10% of the home is a home office. You would be entitled to deduct 10% of your expenses related to the home. Examples of expenses in this case include mortgage interest, property taxes, utilities, insurance, condo fees/HOA, etc.

Mileage – Automobile Expenses
Do you own an investment property or properties? Do you have to drive around to manage them? Whether it be for repairing something, collecting rent, showing vacancies, etc, you are entitled to a deduction related to automobile expenses you are incurring to earn that rental income. That can be expenses such as gas, repairs/maintenance, lease payments, etc. Now in this case, it's important to track your mileage for when you are using your vehicle for these investment property purposesa portion of your auto expenses will be a tax deduction.

Here is one topic that is often misunderstood. On investment properties, you are able to depreciate the value of the building (excluding the land) and that becomes an annual expense against rental income (up to a maximum of 4% of the building value). It basically lowers your book value by the amount of deprecation you take, so it acts as a tax deferral more so than a deduction. You end up paying less income tax yearly on your rental income but end up with a bigger capital gain down the road when selling. Some investors do it and some don’t, but tax deferrals are generally beneficial as a tax planning tool. For more info on this topic see our previous posts on the subject here and here.

We are not tax professionals in any way, so we would defer to your tax professional’s advice on any of these subjects and how they relate to your personal situation. We hope this is a helpful checklist as you file this year. Happy filing! 

Wednesday, March 28, 2018

Real Estate Insider: March 2018 News Report

Should you teach your old house new tricks? Want the best mortgage rate? Are you misusing your Line of Credit? Read all this and more in our latest edition of the Real Estate Insider!

A properly calculated CAP rate can be a very useful tool, but there are many other factors people should be looking into when buying or selling income properties. Are you aware of them? Find out here. >>


“Smart Homes” are taking the world by storm, but is the value added really worth the investment in older homes? It depends! Find out more here. >> 


Are you buying a new home? Here are a few things you should know to make sure you’re protected! >>


If you own or are thinking of getting a heat pump, routine manual cleaning may not be enough! Deep cleaning and regular filter changes are almost a necessity! Read why here. >>


Divorce is an unfortunate yet very common part of today’s society. To make sure you are protected through this process, here are 6 myths about divorce that everyone should know. >>


Are you getting the most out of your line of credit? It can be one of the most useful tools to building wealth and financial freedom, but only if used correctly! Read here to get tips on using your LOC to your advantage. >>


Real Estate > Stocks. Here’s why. >>


AirBNB is an easy way to make money if you’ve got an empty property and are willing to put in the work. Here are some tips and tricks everyone should know before venturing into this market. >>


Everyone is talking about the new standard residential lease form in Ontario, this article should help with explaining everything you must know about this controversial topic. >>


CALLING ALL DEAL HUNTERS! Here are the three top ways to ensure you are getting the best rate on your next mortgage. >>

Wednesday, March 21, 2018

Attention Landlords and Tenants in Ontario – Ontario Standard Leases Are Coming

Are you a landlord or tenant in Ontario? If you are, or are considering becoming one in the near future, we have a timely post for you today.  Mandatory changes are coming to residential lease agreements in the province, and here is what you need to know.

What is Happening With Residential Leases In Ontario?
Landlords of most private residential units in Ontario must start using the standard lease template for all new leases.

When Is This Starting?
These standard leases must be used in Ontario starting April 30, 2018.

Who Decided This?
The Ontario Liberal Government – through the Ministry of Municipal Affairs/Ministry of Housing.

Where Can I Find a Copy of this Standard Lease?
Visit the Central Forms Repository on the Government of Ontario website to download the form.

What is the Purpose of this Standard Lease?
Three primary reasons are stated:
  1. To help landlords and tenants understand their rights.
  2. Reduce illegal terms in leases and misunderstandings regarding verbal agreements.
  3. Reduce the need for Landlord Tenant Board (LTB) hearings to resolves disputes.

What Else Should I Know About Standard Leases?
In the leases, there are mandatory terms (that must be completed and cannot be altered), there are optional additional terms (which allow for unique terms to be agreed to by landlord/tenant) and general information on rights and responsibilities (Ie. subletting, pets, guests, etc).

What Are Our Thoughts On This Issue?
Whether we like it out not it, this will soon be the law. So we will have to deal with it and adapt. First impression is that it will further swing the pendulum towards tenant rights more so than it already is. But fingers crossed that if it doesn’t work the way it is expected to, or if it causes specific problems related to clauses, etc., the government will listen to feedback from the industry and amend this standard lease to get it right.
What are your thoughts on the Standard Lease? We’d love to hear from your landlord/tenant perspective.

Wednesday, February 28, 2018

Real Estate Insider: February 2018 News Report

Welcome back to the Real Estate Insider, readers! This past month, we came across a variety of hot topics you'll want to invest some reading time in, including how marijuana may boost the value of your home, why you should know your credit score, and why you shouldn't chase the lowest mortgage rate!


There are a lot of factors to consider when deciding on either a fixed or variable rate mortgage, and everyone is different. Luckily, ‘’ has compiled a checklist to make your decision easier! Check it out: >>


Mortgage rates are seeing a steady increase for the first time since the early 1990’s, and that trend isn’t stopping next renewal term! Are you prepared for a rate increase? Read more about current trends here. >>


DON’T GET TRICKED BY CHASING THE LOWEST MORTGAGE RATE! There are so many other factors that could save you so much more money in the long run! Read about them all here. >>


There are a lot of expected benefits from the legalization of marijuana, and a boost in housing prices may be one of them! A Study in America found homes close to recreational ‘pot shops’ saw an increase in value by about 8%. Read more here. >>


Are you aware of you Debt-To-Income ratio? It may be time to take a look! Learn what it is and why it is so important when qualifying for a mortgage or line of credit! >>


With the recent real estate “Boom” in Toronto, we have seen the number of people getting their real estate license do an equally impressive “Boom”, but how many of these new agents are successful? How many Toronto realtors are doing less than 1 deal per year? The number will almost certainly shock you, and they are all laid out for you here. >>


While young adults living with their parents give them the ability to save money, study has shown that it may be draining the parent’s retirement funds by more than 24%! Read more about the increasing trend here. >>


Do you want to invest in Real Estate but maybe aren’t ready buy an investment property? Here are 6 ways to passively invest in the growing real estate market! >>


Capital Gains tax has been a hot topic in recent months; especially since house flipping and income properties have increased in popularity. But what about when you are about to inherit some real estate from a relative? How does the taxation work? Read this article to find out the best way to approach these situations. >>


Knowing your credit score is important! Get your credit score and report for free here! >>

Friday, February 23, 2018

Russel's Review: The Real Estate Retirement Plan By Calum Ross

A lot of people ask us for recommendations on real estate and related books to read.  Well, today we are going to start a new periodic series on the blog that reviews recent real estate books that we’ve read.  So without further ado, here goes…

What is the Book?

The Real Estate Retirement Plan – An Investment and Lifestyle Solution for Canadians by Calum Ross with Simon Giannini.

What You'll Learn

The book starts by talking about traditional retirement and why, for many reasons, today’s younger and middle aged population will not be able to look forward to some of the typical retirement income sources of previous generations (ie workplace pensions, generous government entitlements, etc). The population needs to prepare itself for funding their own retirements going forward.

It then segues into a "good debt vs bad debt" discussion about how the public has no problem borrowing to buy depreciating assets like cars or other toys, but find it risky to borrow to invest and buy cash flowing and appreciating assets (ie real estate or equities). People need to start viewing their personal balance sheet more like a corporation, get rid of their bad debt, and also convert their dead equity (ie equity in their personal residence) into productive equity by using it to invest.  The best way to do that for most people would be to refinance equity in their home to buy additional investments, either cash flowing real estate or dividend paying equities. Come retirement time, this strategy should pay off in spades, and the author shares many examples.

Later in the book it talks about building your team, such a mortgage broker and real estate agent, and later about investing in real estate and how to profit from this borrow to invest strategy long term.

Why I Recommend It

I agree with the majority of the concepts in the book and put them into practice personally and with our clients all the time.  It's especially good for beginners as it's written with easy to understand terms.

My Critique

Some of the examples used I thought were pretty rosy. This is definitely not a get rich quick concept; more of slow, steady climb in wealth concept. Don’t want to people thinking this stuff is easy!

So there you have it folks.  Our first book review on the blog. If there are any other books you are interested in hearing about feel free to drop us a line .

Check out our video review of this book here!

You can order a copy online today at Amazon and Indigo. Happy reading!