If you're a first-time homebuyer, a current homeowner looking to downsize or a parent considering buying a secondary property for kids moving for school, chances are you've considered condo ownership.
When looking for a condo, finding the best value is all in the combination of the place, the price and the monthly fees. When calculating how much they will loan to you, mortgage lenders count half of your monthly fees, along with other factors such as property taxes and heat expenses.
Here are five tips from Mortgage Intelligence, to help you get the best value for your condo purchase:
1. Know what your fees cover. Along with maintenance of the building and common areas, some condominiums will include part or all of your utilities or property taxes in your fees, while others keep them completely separate.
2. Check the reserve fund. The corporation responsible for the condo development should have a reserve fund that's large enough to cover the cost of repairs to the building's common elements. A status certificate (or Estoppel certificate in some provinces) will show any planned developments that could increase your monthly fees or require a special one time assessment. You can find similar details in the condo corporation's annual meeting minutes.
3. Think twice about upscale amenities. Keep in mind that building features like pools, saunas, deluxe fitness areas or large common rooms typically require higher condo fees to cover the upkeep. Consider whether you'll really use these features enough to make the extra cost worthwhile.
4. Check the regulations. Make sure you're aware of any bylaws governing your condo development that could affect your lifestyle. For example, bylaws may restrict household pets, gas barbecues, working from home or renting the unit to a tenant.
5. Consider your neighbours. Is the building mainly occupied by owners, or renters? Residents who own and have a vested interest in the building may be more careful about upkeep.
- powered by Mortgage Intelligence
Photo credit: [c] Sharon Diwakar for openphoto.net
In a recent issue of CIBC World Markets' Economic Insights, one of my favourite economists, Benjamin Tal, addresses what we've all been wondering... Are we in a housing market bubble? Is a crash imminent?
Tal states that any such suggestion is "probably wrong".
His reasons for this conclusion:
First, while average house prices have indeed been increasing, the main markets that are pulling up the average are Vancouver (a "highly skewed" market) and, to a lesser extent, Toronto. Pulling out the data from these markets reveals a much more moderate 3.7% year-over-year price increase.
Second, while he does believe that "prices in the Canadian market and its sub-segments are higher than can be explained by factors such as income growth, rent and household formation", the "pace of any correction is likely to be gradual". He demonstrates that we only have a small segment of the population that is vulnerable to interest rate hikes (families with less than 20% equity and/or whose debt payments total more than 40% of their gross income). Further, he maintains that such interest rate increases are expected to be moderate.
Tal concludes that there may indeed be a period of time where housing "underperforms" compared to other assets, but that eventually we will see a return to equilibrium.
If you're house-hunting and wondering whether to get into a bidding war on one of those "hot" houses, this is something to keep in mind. More and more, the answer is you probably shouldn't.
Photo credit: [c] Jasenka Petanjek for openphoto.net
A couple of the chartered banks announced rate increases yesterday and today, and with bond yields going up recently, it is likely that the other lenders will do the same.
If you're in the market for a home and don't have a pre-approval yet, or you've been considering refinancing soon, don't delay calling your mortgage consultant. Lock in these low rates while you have the chance!
