Tag Archives: housing

Tips for moving out of your Parents’ House

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Photo via Pixels/Ketut Subiyanto

It’s about that time in your life when you feel like you need a change of pace and want to move out of your parents’ house. Now, this isn’t as simple as just moving out. There are a lot of steps you need to take in order to be prepared for this new venture in life. Taking on these few tips can help with a smooth transition when moving out of your parents’ and into your new home.

Finding a New Place

Once you’ve decided to move out, you’ll next have to decide if you want to rent or buy a place of your own. Many people lean toward renting since it’s a much quicker and easier way to get a place. Although renting may be easier, buying is typically the more financially responsible route to take.

As a potential new home buyer, you’ll want to do some research on tips for buying your first home. Although there are more hoops to jump through, you’ll be investing your money into real estate and a place to live, instead of throwing your money away by renting someone else’s place.

Before starting your home hunt, ask yourself “how much house can I afford?” Establishing this ahead of time will allow you to know exactly how much you have available to go toward a payment for your new home. Consider working with a real estate agent to help with your home search. They will know the ups and downs of the market and help you find the home that’s right for you.

Decluttering and Reorganization

Many people could agree that moving out of your parents’ house is when the most decluttering needs to happen. You have clothes from all different points in your life, trinkets, and memory boxes galore. Prioritize a day or two to declutter and get rid of the things you no longer need. Then once you start packing you’ll need to move a lot less.

Decluttering prior to your move will also ease the reorganization process in your new place. Researching organization tips can help you find the best ways to do this. Buying organizational cubes, stackable containers, and any storage-type product can help keep all your items in the right place and avoid new clutter.

Developing Financial Independence

Moving out on your own means being financially independent. You’re not relying on your parents to buy the groceries or pay the utility bill. Most expenses are now on you to deal with, and you’ll want to know how you can find your financial independence. Continue Reading…

Covid pandemic impacting Canadians’ mental health with worries about rising Debt and Housing

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A third of Canadians were financially unprepared for the pandemic, and more than 75% think Covid-19 has impacted their mental health, according to a Manulife Debt Survey released late Tuesday. Young people are particularly concerned that their hopes for home ownership are slipping out of reach: two thirds of Canadians served who do not own a home worry about saving for one. 

A whopping 36% said they worry significantly about saving for a home, while 28% are concerned about supporting their children through post-secondary education (28%) and 28% about saving for retirement.

On average, Canadians have been allocating nearly half their income to essentials like food and housing since COVID-19 began, with 58% of homeowners and 54% of renters worry about making payments.

Manulife Bank CEO Rick Lunny

“Debt can negatively impact mental health and leave Canadians feeling like their financial goals are unachievable. The pandemic has made that even more pronounced,” said Rick Lunny, President and CEO, Manulife Bank. “It’s so important to have financial flexibility, especially when one looks at purchasing a home – it’s easy to feel stressed. Financial conversations are essential to identify opportunities, what matters most and help you stay on track, no matter the financial environment.”

A financially unprepared population

The survey found 35% admit they were financially unprepared for the pandemic. 74% believe their financial situation has been impacted as a result of the pandemic and 69% of them  say the impact has been overall negative: 42% worry that it may take them over a year to recover to pre-COVID-19 levels.

One in four are struggling to keep up with their bills, with one in six laid off due to COVID-19: an equal number say they would have been laid off had it not been for the wage subsidy provided by Ottawa.

Some have flourished

The survey reveals a sharp disparity in how the pandemic has impacted us, with some flourishing as others have been devastated. Manulife views this as evidence of  a K-shaped recovery narrative. On the one hand, while Canadian on average, appear to be saving more compared to a year ago (16%  of after-tax income, on avg. vs. 14%  in Fall 2019), 24% have been saving absolutely no after-tax income compared to the same period last year. Within the indebted population there has been a significant increase in the proportion of those who say everyday living is the cause of their debt: 24%. This suggests more Canadians who are in debt are struggling to make ends meet, even if fewer Canadians (27% debt-free vs. 21% on Fall 2019) are now in debt overall compared to a year ago.

Continue Reading…

What do home buyers want from the Federal Budget?

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

The Federal government’s budget reveal is tomorrow, and all eyes  are on what kinds of goodies will be included for beleaguered first-time home buyers.

While Finance Minister Bill Morneau has strongly hinted that some sort of measure would be unveiled to alleviate the home affordability challenges facing Canadians, it remains to be seen what that will entail. In the meantime, the government has been on the receiving end of proposals from various members of the housing industry, including local and regional real estate boards as well as Mortgage Professionals Canada, as to what would best address the issue.

Industry wants Stress Test, Amortizations, reeled back

Much of the focus has been placed on two key areas: the federal mortgage stress test, which was implemented just over a year ago in January 2018, as well as the length of maximum amortizations for first-time buyers.

Relaxing the criteria around both would improve buyers’ chances of qualifying for a mortgage, experts argue, and therefore should be the priority of the feds when implementing change. The result of the stricter threshold has effectively cooled demand in even the largest Canadian markets, and has pushed a greater percentage of buyers to high-rise living across the nation, from Vancouver condos for sale, to Hamilton and Ottawa condos, rather than single-family detached options.

Survey results yield other priorities

However, home buyers aren’t necessarily in agreeance with that approach. According to a recent survey conducted by Zoocasa, while 82% of Canadians feel that housing affordability continues to be a major issue, they’re not so sure the government is in a position to improve the situation. A total of 55% of respondents do not believe that affordability can be fixed via government measures alone, while 21% don’t feel it’s possible for new policies to exact change within the next five years.

Respondents also had different opinions about what measures would be of biggest help to their pocket books. When asked specifically about the mortgage stress test, for instance, only 57% said they were aware of what it was – and of that group, just half felt reducing the test’s rate threshold (currently the Bank of Canada’s five-year rate of 5.34% or 2% on top of the borrower’s contract rate, whichever is higher) would be of help. Only 15% of all respondents felt such a measure would be effective.

They also weren’t sold that extending maximum amortizations for high-ratio borrowers (those paying less than 20% down) or first-time buyers would be of service either; doing so would reduce monthly mortgage payments, making home financing easier on household budgets, and also ease the stress test’s affordability criteria. Continue Reading…

The worst markets for the Land Transfer Tax

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

It’s no secret that purchasing a home is the largest financial investment for many households, and having a realistic budget is key to maximizing affordability. However, despite the years of careful saving and planning most prospective buyers undertake, there’s one closing cost that can present considerable sticker shock: land transfer tax.

Charged by the provincial government (as well as at the municipal level in the City of Toronto), this levy is calculated based on the total purchase price of the home. It must be paid in cash before the transaction can be completed, and cannot be covered by a home loan or rolled into a mortgage.

Because LTT is based on home price, this means buyers in Ontario’s priciest markets shell out much more for it than others. In fact, according to a recent cost analysis by Zoocasa, a buyer in Toronto would be taxed $27,521 for a home priced at the September average of $864,275. That’s an additional 3.2% of the total purchase price.

In Sault Ste. Marie, however, where the average home price clocks in at a relatively more affordable $164,853, said buyer would pay only $1,374 in tax, representing just 0.8% of the total home price.

However, buyers in the majority of Ontario’s more moderately-priced markets can expect to pay between $5,000 and $7,000 in LTT; someone perusing Kitchener homes for sale, which come at the average price of $479,904, would pay $6,073 in LTT. A buyer of Hamilton real estate would be taxed $6,482 on the average home price of $500,365.

Check out the infographic to the left to see how LTT can vary in housing markets across Ontario:

LTT rebates available for first-time home buyers

Fortunately for those climbing onto the property ladder for the first time, there is some relief from land transfer tax in the form of rebates: The Ontario government will refund $4,000, while the City of Toronto offers $4,475. As well, first-time home buyers paying less than $368,360 on their home – the provincial threshold for LTT – will avoid paying it altogether, a reality in markets such as Saut Se. Marie, Thunder Bay, North Bay, Sudbury, Windsor-Essex, and Kingston.

Top 5 Ontario cities where you’ll pay the most Land Transfer Tax

1 – City of Toronto: $27,531

2 – Oakville: $17,750

3 – Richmond Hill: $16,571

4 – Vaughan: $16,369

5 – Markham: $14,424 Continue Reading…

How the USMCA affects Canadian homebuyers

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By Jordan Lavin, Ratehub.ca

Special to the Financial Independence Hub

Goodbye NAFTA, hello US-Mexico-Canada Agreement (USMCA).

The new trade deal with our neighbours to the south will have wide-reaching effects across all areas of our economy, and housing is no exception. While the agreement is said to be good for our economy overall, it’s not necessarily good news for your ability to afford a home.

What is the USMCA?

Canada recently reached an agreement with the United States and Mexico to replace NAFTA, the decades-old trade agreement that has stood since it was signed by Brian Mulroney, Bill Clinton and Carlos Salinas de Gortari.

The new agreement looks much like the old one, with some changes. Key differences include changes to the way the three countries approach auto manufacturing, fewer restrictions on trade of dairy products, and stronger measures against counterfeiting and media piracy. Like NAFTA, the USMCA makes it possible for the three countries to exchange goods without barriers.

For now, the US, Mexico and Canada will continue trading under the rules of NAFTA. The USMCA will come into effect once it’s ratified by its members, a process that could take months. In the United States, congress won’t vote on ratification until some time next year due to that county’s mid-term elections. Here in Canada, the looming Federal election means that if the USMCA isn’t made official by June, it could be delayed until 2020.

How does this affect Canadian housing?

If you’re wondering how having access to American milk at your local Superstore can possibly affect how much mortgage you can afford, you’re not alone. The implications for home affordability are driven by the market’s reaction to the uncertainty of the negotiation period, the removal of uncertainty brought by a signed agreement, and the actual economic growth that’s expected to occur because of the USMCA once it’s in force.

When the Trump administration demanded to renegotiate “the worst trade deal” ever, the market got spooked. As the trade war intensified, the US threatened to (and did) impose significant tariffs on imports from Canada. With repeated threats from our largest trading partner, there was a real chance that the Canadian economy could be jeopardized. Even though our economy was growing during that time, the Bank of Canada (BoC) was reluctant to raise interest rates, which it would normally do in that situation. Continue Reading…