Calgary Real Estate Blog

London at Heritage Station Condo’s For Sale

Still looking to live in London at Heritage?  There are still several condo’s available in the first phase.  Why go and buy direct from the builder at an inflated price PLUS 5% GST?  These units do not last long, this is an exceptional development with future amenities that will be envied.  Start your search today – call me for your private showings!

NO DOWN PAYMENT? YES You Can

Free Down Payment Mortgage Program

Zero Down Payment Mortgage – Gone.. but there is something else.

If you’re wondering why government backed zero down mortgages have disappeared in Canada, it is because of the mortgage/foreclosure crisis in the States. These products, originally offered by Alternative Lenders, quickly disappeared when several, if not most, of the alternative lenders ran back down south of the border and took their products with them.  When this happened, we were not surprised to see the end of zero down and 40 year amortization’s as they were offered by our government insurer, CMHC and U.S. based insurer, Genworth.  This was done quickly to prevent the same crisis in Canada.  There are many opinions based on this information and I am not here to voice mine.  I am simply here to facilitate information and make sure all of my clients have access to all of the products that are offered.  I would suggest consulting your financial planner on the benefits or negatives to utilizing this type of product if you are at all concerned with what the future of the economy in Canada might have in store and whether or not you would be negatively affected if you chose to enter into one of these products.

Whether you are a first time buyer who does not have a sufficient down payment or you want to use your own funds for other purposes, consider these options.

5% FREE Down Payment
This is NOT a ZERO DOWN Mortgage, instead the lender actually GIVES you 5% down, resulting in a mortgage that starts out at 95% LTV + applicable insurance premiums.

The terms of this mortgage are the following:

• Purchases Only
• Owner Occupied, single family unit and duplexes only
• New or existing properties (no builds)
• Minimum Credit score – 680
• Up to a 35 year Amortization
• Must show 1.5% in closing costs available – lender needs to confirm you have additional funds available for legal fees, moving, unforeseen events, etc.
• Five year fixed rates, based on POSTED rates, not discounted
• 5% cash back based on the entire purchase price, will be advanced at closing to use for down payment
• Deposit accompanied with an offer to purchase is still required, however, you will get it back, minus legal fees, from your lawyer after closing

5% Borrowed Down Payment “Flex Down” Mortgage – this is another alternative that you can consider

Offered through CMHC:

The terms of this mortgage are the following:

• Purchases Only
• Minimum Credit Score – 650
• Up to 35 year Amortization
• Must show 1.5% in closing costs available – lender needs to confirm you have additional funds available for legal fees, moving, unforeseen events, etc.

Advantages to Borrowed Down: Unlike the previous zero down product offered by CMHC, your down payment will not be amortized with the mortgage, potentially saving money in interest charges

• Fixed and variable rates are available
  Borrowed down payment can come from any source – credit cards, loans, unsecured lines of credit; must be able to qualify with debt service ratios including this borrowed down payment

*CMHC Premium is 2.9% – add an additional .20 per 5 year increase in amortization

For example:

Based on a $200,000 mortgage – CMHC Premium is $5,800 rolled in based on a 25 year amortization. If you want to increase your amortization to the maximum 35 year amortization, it would be calculated like this:

$200,000 x 2.9% + .4%= 3.30% $6,600 premium rolled in

Fixed Rate Mortgage vs. Variable – The Great Debate

The Great Rate Debate

Should I even start?  This is a huge topic of controversy among Canadians right now between those of us with industry knowledge and experience and even those who don’t.

“Here’s my OPINION on Fixed Rates versus a Variable Rate in today’s economic state; I do not present this with any claims with it to be fact – it is simply my Professional opinion.”

This is how I advise my clients when they ask me – “Should I go variable or fixed?”

First, yes, the Bank of Canada meets on June 1, 2010.  Analysts are predicting the Key Overnight Rate to go up by at least 25 Bps, bringing it up to 50 Bps.  That is DOUBLE what it is now, which should bring PRIME up to 4.50%.

Second, Helmut Pastrick, chief economist with Central 1, has indicated to CBC in October that the Bank of Canada is anxious to move away from low rates.  He predicts that the bank will likely raise rates by half a percentage point at a time perhaps three times through the fall to spring from 2010 – 2011.  “That would allow them some room to cut rates should the economic recovery falter.”  With this information, it makes me uncomfortable to advise a variable rate, especially when the 5 and 7 year fixed rates are so low.  Why not lock into a nice low rate that won’t be subject to uncertainty during these times?  No one can accurately predict the future and with this type of economic uncertainty, wouldn’t it be nice to know that your mortgage payment is not going to be affected by it?

I recently had a discussion with a young man in Fort McMurray who was buying his first home.  He was pre-approved for many months prior to finally finding a condo and making an offer.  When it came time to do the financing, he got a rate of 4.34% for a five year fixed.  He sent me an email a few days later, saying he was talking to his friend and asked me why I didn’t get him the 2.2% 5 year variable that was available at the time.  I explained to him that he indicated initially he was only interested in a five year fixed, which is what his pre-approval was based on.  I then proceeded to explain how a variable works, the risks involved and what I would suggest given the current economic environment.  He responded later in another email indicating he went to another mortgage broker in Fort Mac that said the opposite.  This mortgage broker said that the variable was the way to go and that he would save $52,000 the first year alone in interest.  He also said that he questioned whose interests I was really looking our for, his or mine.

Well.  If I was not looking out for his interests, I would not have explained the risks associated with the product, I would simply have switched him over to that product.  The finders fees we receive for either product are identical, so there was no further benefit for me to place him in one verses the other.  As far as saving $52,000 in interest the first year… well, that is not even remotely possible.  I feel we, as professional’s have the responsibility to advise our clients on the risks associated with a variable rate right now.  Yes, 2% is a lovely rate.  The problem is, however, when prime goes up to say, 5% and you have a P.-10% rate, your rate is now 4.90%.  That is more than you would have been paying if you locked into a five year rate now instead.  Additionally, yes, you can lock in at any time.  Typically when the variable rates are going up, so are the bond yields, making the fixed higher as well.  So even though “YAY” you can lock in, you are still not locking into the fixed rate you COULD have, initially.

Again, this is simply my take on the Great Rate Debate….

Hart mansion formerly owned by Calgary wrestling family for sale

Photograph by: Leah Hennel, Calgary Herald

Three-storey mansion includes wrestling dungeon

By Mario Toneguzzi, Calgary Herald May 14, 2010 7:02 AM

Described as “one of the most sophisticated buying opportunities of this century,” the iconic Hart mansion, one of the country’s most famous historical residences, has been listed for sale in Calgary for nearly $5 million, the Herald has learned.

The three-storey mansion, formerly owned by wrestling’s famous Hart clan and currently owned by Dario Berloni, owner of the downtown Teatro Restaurant, is about 5,600 square feet on about one hectare of land with stunning views of the city from Patina Place S.W.

It has been refurbished inside, but the legendary dungeon, a specially outfitted, custom-built basement where famous wrestlers trained over the years, has been preserved.

The mansion is listed on the MLS system by Rooney Cronin + Valentine of Re/Max Real Estate (Central) for

$4.95 million.

“When (Dario) bought it a few years ago, it needed to be refurbished,” said realtor Donna Rooney.

“He has spent a lot of time on this and I would say at massive expense.”

“The amount of money that has gone into this and the love that’s gone into this renovation has been spectacular. Anybody that’s seen the house is just in awe,” said Rooney.

Bret (The Hitman) Hart dropped by the house with his girlfriend Thursday afternoon to take some photos, and said he was surprised it is for sale again.

“But at the same time, I could see somebody living in this home,” said the world-famous former wrestling champion, who grew up in the home.

“It’s a beautiful house. It’s filled with memories and love. Pleasant memories.

“I like a lot of the changes, but I miss the old house.”

The mansion has been restored to keep the integrity of the way it was, but also to modernize it, said Rooney.

“It’s beautiful. There’s been a lot of imported tile and wood and the kitchen is totally divine. The house is gorgeous. It’s very much a grand property,” she said.

There is approval in place for multi-family development on the site, if potential buyers are interested in pursuing that.

A few years ago, there was a great deal of controversy over that potential development opportunity.

“I know they’ve done some renovations on it and they’ve restored it,” said Ross Hart, one of the 12 Hart children who grew up in the home.

“It all depends on the type of buyer. If it’s someone who wants to preserve the house and the landscape, I’m really happy with that.

“I’m not so keen on some developer just buying it that’s going to sell a bunch of townhouses or condos on it and change the landscape, the traditional look of the yard and the character of the home itself.”

The Hart mansion was built in 1905 by Edward Henry Crandell, a successful businessman whose family owned the mansion until 1935, when it was bought by Judge Henry Stuart Patterson.

The home was sold to wrestling icon Stu Hart and his wife Helen in 1951 for $25,000.

The Hart family sold the mansion in 2004 for $1.5 million.

Stu Hart, the patriarch of the wrestling dynasty, died in 2003. His wife Helen died in 2001.

“This house would be similar to some of the great Mount Royal mansions that you would see, and it’s perched up on the hill on the west end of the city. That’s really unusual,” said Rooney.

“It’s got absolutely stunning views of the city and it feels like a grand old dame that you would see in Europe. It’s got very much a European-type flavour. You could see somebody having a family of 12 in this house. There’s a multitude of bedrooms (six) and they’re all equipped with beautiful ensuites. There isn’t an inch of this home that hasn’t been touched.

“The old dungeon has been preserved. There’s pictures of the Hart family up. It’s turned into an exercise room. The punching bag is there. Some of the old equipment is still there.

“Anything they could keep that the Harts had in place, they kept. And they complemented it with imported fixtures.”

mtoneguzzi@theherald.canwest.com

Don Campbell Agree’s Renters to Suffer with Rules Change

Don Campbell — Author of 81 Financial and Tax Tips for the Canadian Real Estate Investor (Wiley, $36.95) and President of REIN (Real Estate Investment Network of Canada) discusses the new Mortgage Rules and how they will affect the Canadian Renter as well as the availability of rental property in Canada.  As he points out, the results of these new Mortgage Rules have some concern for the potential of Mortgage Fraud escalating with some Real Estate Investors and some Mortgage Brokers as well.

In 2006, the rules were that you had to put 20% down to get a mortgage on a rental property purchase in Canada.  This tight lending rule resulted in many Investors and Mortgage Broker’s fraudulently submitting applications to lenders, indicating they were purchasing the property as owner occupied.  This enabled the investors to have better cash flowing properties with smaller investments.

The number of fraudulently purchased property was drastically reduced with the easing of the strict loan to values allowable via CMHC and Genworth.  These less strict lending ratios stimulated the purchase of rental property country wide.

My previous blog’s discussed the potential unintended consequences to the new mortgage rules where, up until Don Campbell’s comments in this clip, no one else even touched on in the Media.

Stay tuned for more interesting unintended consequences to these new rules as rates increase and the qualifying of investment property becomes more difficult.

Separation Divorce and Real Estate in Calgary

Getting separated or divorced in Calgary these days is not unusual.  Having family members or friends that are going through this transition in their life is common.  How people deal with the transition can range from extremely volatile to very amicable.  Which way do you think is best for all concerned?

As in previous posts, I am an advocate of Fairway Divorce, simply because I believe that people who once loved each other and wanted to build a life together, should be able to end the relationship in a mature and fair way.

Having said that, what happens during the division of assets process?  What do you do with your marital home?

Determining whether to SELL or to buy out your spouse.  If the marital home has a ton of equity in it, then buying out a spouse is possible.  Normally the property will have to be sold and the balance of cash that is left will be split between you and your ex.  That is the typical way, since many times one person cannot afford to qualify for a mortgage that would include an additional chunk of money that would be used to buy out the other soon to be ex-spouse.

Once you decide to sell the home, the next step is to find a qualified REALTOR® to list the property.  Most couples feel it is likely a good idea to find a person that neither of them knows personally, to keep the agent impartial and professional.  I highly recommend this way of thinking.  The last thing a REALTOR® wants is to placed in a position of being accused of choosing sides in a legal matter like this.

After the home is sold, or when it is unconditionally sold – then you would start looking at what you would like to buy.  Make sure you get Pre-Approved by a qualified Mortgage Professional BEFORE you start looking for a home with a REALTOR®.  You do not want to fall in love with a property, only to find out after an offer is accepted that you do not qualify for that amount.

I offer a FULL service for my clients, from Pre-Approval to Possession.  My clients do not have to worry about any mis-communication between myself and a Mortgage Professional, because my vast experience as a Mortgage Professional enables me to offer a Streamlined Real Estate Experience unique to the Calgary area.  The only time my clients have experienced any problems with closing or any bumps in the road along the way with their purchase is when they have used someone else for their Mortgage needs.

In this tumultuous time in your life, the less problems you encounter, the better.  I am happy to help you through this transition with the least amount of stress.

Buying a Condo in Calgary?

If you have purchased or are considering a Condo as your next home purchase in Calgary, don’t forget the content insurance.

Most condo corporations have insurance that will cover your loss in the event of a fire that is not your fault, however, don’t forget about your contents!  Sadly, both tenants and home owners alike in the Canvas Development in Calgary’s SW neighborhood of Shawnessy didn’t make the step to insure their contents.

Although many condo or condominium homeowners usually have a tendency to overlook it, condo contents insurance is really important for them. Most of them, particularly first time buyers, often believe that their condo association must already have a “master policy” in place that protects the building and its structure and they have no further role to play. This is a mistaken belief and one must have condo contents insurance to cover his/her personal items and belongings, extras or alterations inside his/her condo unit, and personal liability coverage.

There are two broad categories of condominium insurance packages. A personal condo contents insurance policy is important because it provides coverage for your personal contents, structural changes and betterment in the interior of your condo unit. Such alterations or improvements may be in the form of altered cabinetry or flooring, etc. Such a policy also includes additionally incurred living expenses in case of any kind of displacement because of fire, burglary or other disasters. You are eligible to get personal liability cover.

It is important for you to notify your insurance company in case if you have decided to rent your condo to others. This will help them to choose the right kind of insurance policy for you. This is often referred as condo rented to others or simply the condo landlord insurance policy. This will have the coverage when the landlords rent their condo. The extra benefits that are included are the amount incurred due to loss of rents and other vandalism coverage due to any unexpected events.

The condo and other personal belongings will be covered under this kind of insurance policy. However, it will not cover the personal belongings of the renters or the tenants. It is highly recommended that the tenants must equip themselves with the renter’s insurance policy to have coverage in case of emergencies.

A “master policy” kind of home owner’s association commercial insurance is being provided by the condo homeowners association. These will often the cover the common areas which are shared with others in the condominium premises. The articles of the condo association and state law determine exactly which building components are covered under the association’s master policy. In most cases, the association’s coverage is confined to the exterior walls meaning that condo dwellers are responsible for the interior walls and possibly for fixtures, as well as their personal property and liability exposures. This is where a condo home contents insurance policy comes into play.

Taking into account all the things mentioned above, it becomes abundantly clear that condo dwellers can ignore condo contents insurance only at their own peril. The condo association may cover the outside of the building, but that can never be enough for owners of condo units. They must purchase condo contents insurancepolicy from a suitable insurance company for the coverage of their own belongings. So it’s plain foolishness to underestimate the value of such a policy.

Article Courtesy of  About Content Insurance

Calgary Flames House for Sale

Dion Phaneuf – The former all-star defenceman was emotional when he told reporters that he was caught off guard by news of the trade.

“It was definitely a shock, but I’m very excited about going to Toronto and being a Maple Leaf.Phaneuf will arrive in Toronto on Sunday night and will skate with the team on Monday.

Dion has put his Aspen Hills home in Calgary for sale at a wopping 1.3 million dollars.

CLICK HERE to view Dion Phaneuf’s house for sale. 

If you are keen to view, just call me at 403-991-2198 and I’d be happy to set that up for you.

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London at Heritage Station Condo Defaults

The Calgary Herald posted an ad last week about Danny Cote, a London at Heritage Station condo buyer who last year put down 5% of the THEN purchase price of $420,000 as a deposit on the condo.  The Article stated that CMHC agreed to insure the loan based on the purchase price 2 1/2 years ago, then changed their mind.  What happened is that the first tower closed and people took possession of the condos.  There were many defaults in that tower too, but it did sell out.  Many investors bought units in tower one of London and subsequently started to sell the units at a loss just to get rid of them.  Some investors bought up blocks of units and were simply not prepared to walk away from their deposits so they closed and bit the bullet and sold at a loss.  Those units in tower one are substantially lower priced than what the builders at Westcorp Properties are trying to sell tower 2 for.  CMHC uses a valuation system called EMILI.  What EMILI does is use the history of similar properties in the same area, with similar amenities and features and uses the statistics of what they have sold for to come up with a value.  So realistically, if that last fifteen 1 bedroom + a den condos in tower 1 of London sold for $270,000 and Westcorp Properties is selling the exact same unit with all the same amenities for $330,000 PLUS GST, how can CMHC justify the value difference and  insure it?  People cannot blame CMHC for this, they should be looking at the builder who has a bottom line that they are working with, and realistically to maintain a reputation of being concerned about PEOPLE, Westcorp Properties should seriously consider reducing the price on their initial contracts so regular Joe Schmo’s don’t lose their life savings on their deposits.  But this isn’t about people or their lives, this is about business folks.

Many other condo developments in Calgary suffered the same set backs for many reasons.

2 1/2 years ago there were many other mortgage products available to consumers that would allow them to purchase condo units as second homes or investment property.  Those products are simply not available any more, they are gone.  Those lenders have left the country and turned out the lights.

Value – with the crazy high prices 2 1/2 years ago, it was a huge risk for anyone to purchase a condo with years in the making.  It was a gamble then and it is a gamble to do it now.  If you sign a pre-sale condo contract you must realize and recognize the risks associated with it.  Many investors or regular people who bought condo pre-sales in 2005 were laughing all the way to the bank in 2007 when the value of the build came in up to $100,000 higher than when they signed the contract 2 years before.  This is the gamble with pre-sales.

The public needs to understand that when you buy through a builder, the builders are not held to any fiduciary duties to inform or educate the buyers about the risks associated with buying in advance.  There is no seminar they provide to inform buyers about what COULD happen in the future when it comes time to close on the build.

Builders sales contracts are completely, one sided.  They are in the BEST interest of the builder, PERIOD.  If you’re looking to buy a brand new condo in Calgary and think you want to have one built, think again.  Why not wait until the project is finished, go into the sales office and buy one for a substantially reduced price?  Sure you’re risking that the value may go up, and that may be the case.  You have to weigh your risk ability.

The best thing to do with a purchase as large and important as buying real estate is to arm yourself with as much information as you can.  Working with a REALTOR® means that they have a fiduciary duty to make sure you understand all of the rules and possible consequences to your purchase.  Working with a builder or a for sale by owner means you are NOT protected.  Always take a sales contract from a builder to your Real Estate Lawyer.  They will advise you of what the risks are associated with a pre-sale.

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CIR Joins Global Group

Calgary-based CIR Realty, one of Canada’s largest independent real estate organizations, has joined Chicago-based Leading Real Estate Companies of the World.

CIR Realty now is linked to more than 600 real estate companies internationally in the largest network of firms in the residential real estate industry, with 150,000 realtors and more than $300 billion in collective sales volume. The network consists of companies either locally branded or regionally branded in 35 countries and 50,000 offices.

As a member of the network, CIR can assist individuals buying or selling property throughout the world.

“As an independent, you sometimes don’t have that larger network to provide business to,” said Ron Stader, broker and co-owner of CIR with his brother Ray. “For example, if we have someone moving to Houston tomorrow, we now can connect with our Houston member and we will provide that client to the company that’s been hand-chosen there.”

CIR was started by Stader’s father, Karl, in 1983 with about 35 realtors. Ron Stader joined the company in 1988 and Ray joined in 1992. The three of them ran the company until Karl retired. Now Ron manages the company and Ray is the IT manager.

“My father has really great skills starting a business and being very careful financially,” said Ron Stader.

Ruth Ann Pepple, president of network services for the Leading Real Estate Companies of the World group, said CIR was selected after meeting a number of standards.

“Their selection was based on the company’s outstanding reputation, as well as its demonstrated ability to deliver the same high-quality services as our other affiliates,” she said in a statement.

Stader said CIR had to go through a stringent process to ensure it would qualify. CIR Realty has four Calgary and 10 satellite offices in surrounding areas. It holds the second-largest market share in the city and has 690 realtors.

mtoneguzzi@theherald.canwest.com

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