Home Ownershipis the Key to Your

Future Joanne Lozinski

Sales RepresentativesRE/MAX Professionals Inc.

905-270-8880

Real Estate is unlike any other commodity

And here’s why…And here’s why…Real Estate• Principal residence Tax Free• Practical

(everyone requires shelter)• Offers security

(temporarily unemployed)  Now you’ve got extra room Take in a boarder Help with the payments Your house is appreciating

in value and you’re continuing to build equity

Other commodities• Taxable• You can’t raise a family

living in a mutual fund• Less Secure

(you lose your job)

Limited space Cash in your stocks and

bonds Pay your landlord and up

with 0

5% Down-Payment Plan5% Down-Payment Plan

Why NOW is the Time to Buy

Low Interest RatesLow Interest Rates

RRSP & Home Buyers PlanRRSP & Home Buyers Plan

In the 1980’s the minimum down-payment required to purchase a home was 10%

The current 5 year mortgage rate is 5.33% lower than the past 20 year average

Repay back over 15 years in equal installments

May borrow up to $20,000.00 each from RRSP

The minimum required down-payment today is 5%!

The average mortgage rate for past 20 years 11.08%

What does that equate to in dollars and cents?

11.08% 

$250,000(mortgage)

 $2,464.76(per month)

5.45%

$250,000(mortgage)

 $1,527.77(per month)

Difference of $936.99 per month savingsDifference of $936.99 per month savings

Market Trends and Prices

1985 - $109,0941986 - $138,9251987 - $189,1051988 - $229,6351989 - $273,6981990 - $255,0201991-$234,313

1999 - $228,3722000 - $343,2552001 - $251,5082002 - $275,3312003 - $293,0672004 – $314,6612005 - $335,971

1992 - $214,9711993 - $206,4961994 - $208,9211995 - $303,0281996 - $198,1501997 - $211,3071998 - $216,815

1989 Market highly speculatedOver-built, over-inflated

Interest rates 14%Price adjustment

Average Price of Single Family Dwellings in the GTA

Why Real Estate is a good investment

Over the past 36 years real estate has increased 1470%  Average Price of Single Family Dwelling 1980-2004

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

This chart represents average price trends for houses in the Toronto area during the last 24 years. House prices clearly peaked in 1989 and bottomed out in 1996.

Data from Toronto Real Estate Board

Toronto Real Estate Board Historical Stats

1966$21,36

0

2004$315,231

1986$138,92

5

1996$198,15

0

1976$61,38

9

2005$335,791

Historically Real Estate has proven to be an

excellent investment It is a hedge against inflation It can provide excellent collateral It is easy to liquidate It provides an avenue for forced

savings It’s value increases over timeYour principal

residence is a tax free gain

Historically Real Estate has proven to be an

excellent investment  

1986 - $143,9002004 - $462,000tax free gain of $318,000

1986 - $119,9002004 - $345,000tax free gain of $225,100

Renting vs. Owning

With rent increasingMortgage rates decreasingProperty values increasing

 There is absolutely NO benefit to rentingNO

At a rental rate of $1,200.00 per month it will cost you At a rental rate of $1,200.00 per month it will cost you $60,000.00 in rental payments over a 5 year term!!$60,000.00 in rental payments over a 5 year term!!

Retrofit Most existing two-unit houses (built before Nov. 16, 1995) will be "grandfathered" (continue to be allowed) under the new legislation, provided they meet applicable municipal planning standards. As well, two unit houses should have met Fire Code requirements by July 14, 1996. In general, new apartments must comply with the Building Code, and existing apartments must comply with the Fire Code.  Both new and existing apartments must comply with certain property and municipal zoning (planning) standards.

It would appear your best protection is to obtain a certificate of compliance from the local fire department for any property that might fall under the jurisdiction of the Fire Code, Section 9.8. You should obtain a building permit before starting any new construction. If you don’t obtain a permit, or a certificate of compliance, the dwelling unit could possibly be non-conforming, and therefore considered illegal.

Also, municipalities have the right to decide where they will allow homes to have additional dwelling units and can designate areas where they will not allow homes to have additional dwelling units. Units installed after November 16, 1995 without a permit are unprotected (even if they meet fire, safety & electrical standards) and the municipality could require removal of the unit.

TREB District Map

Click on map to view

larger section

Housing Types and Styles - Townhouses

Condominium TownhousesMonthly maintenance fees usually range from $140.00/mo - $210.00/mo. This fee includes exterior maintenance & building insurance.

SECOND FLOOR

GROUND FLOOR

THIRD FLOOR

SECOND FLOOR

GROUND FLOOR

BASEMENTBASEMENT

Freehold TownhouseNo Maintenance fee. You own the land.

CRAWL SPACEBASEMENT

LOWER LEVELFAMILY ROOM

MAIN LEVELLIVING ROOM

UPPER LEVELBEDROOMSBEDROOMS

Different Types of TownhousesDifferent Types of Townhouses

Free Condo TownhouseAlso includes a maintenance fee that is usually less than the standard condo townhouse. This fee includes general landscaping but you are responsible for exterior maintenance of the building.

Two

Stor

ey

Mul

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Thre

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Housing Types and Styles - Townhouses

Typical TownhouseTypical Townhouse

2-Storey Townhouse

Freehold Townhouse

Multi-Level Townhouse

3-Storey Townhouse

Freehold Condo

Housing Types and Styles - Semi-Detached

Attached by Common Wall or GarageAttached by Common Wall or Garage

Bung

alow

Raise

d Bu

ngal

ow

Thre

e St

orey

Two

Stor

ey GROUND FLOOR

SECOND FLOOR

THIRD FLOOR

BASEMENT

Mul

ti-Le

vel

Fron

t Spl

it

Five

Leve

l Ba

cksp

lit

GROUND FLOORGROUND

FLOOR BASEMENTBASEMENT BASEMENT

GROUND FLOOR

SECOND FLOOR

Four

Lev

el

Back

split

Thre

e Le

vel

Back

split

MAIN LEVELLIVING ROOM

MAIN LEVELLIVING ROOM

MAIN LEVELLIVING ROOM

MAIN LEVELLIVING ROOMMAIN LEVEL

LIVING ROOM

UPPER LEVELBEDROOMS

UPPER LEVELBEDROOMS

UPPER LEVELBEDROOMS

UPPER LEVELBEDROOMS

BEDROOMSBEDROOMS

LOWER LEVELFAMILY ROOM

LOWER LEVELFAMILY ROOM

LOWER LEVELFAMILY ROOM

LOWER LEVELFAMILY ROOM

CRAWL SPACE CRAWL SPACE

CRAWL SPACE CRAWL SPACEBASEMENT

BASEMENTBASEMENT

BASEMENTSUB-BSMT BASEMENT

Housing Types and Styles - Semi-Detached

Attached by Common Wall or GarageAttached by Common Wall or GarageTypical Semi-DetachedTypical Semi-Detached

Bungalow

Multi-Level5 Level Backsplit4 Level Backsplit

2-Storey 3 Level Backsplit

Raised Bungalow

3-Storey

Housing Types and Styles - LinkAttached by footing or garageAttached by footing or garage

Link

by

Foot

ing

Link

by

Gara

ges

BASEMENT

BASEMENTBASEMENT

BASEMENT

GROUND FLOOR

GROUND FLOOR

GROUND FLOOR

GROUND FLOOR

SECOND FLOOR

SECOND FLOORSECOND FLOOR

SECOND FLOOR

Housing Types and Styles - LinkAttached by footing or garageAttached by footing or garage

Typical LinkTypical Link

Link by Garage

Link by Footing

Link by Garage

Link by Garage

Link by Garage Link by Footing

Link by Footing

Link by Footing

Housing Types and Styles - Detached

Bung

alow

2

½ St

orey

SECOND FLOOR

3rd FLOOR

4 L

evel

Sid

espl

it

Fro

nt S

plit

Five

Lev

el

Back

split

Four

Lev

el

Back

split

Thre

e Le

vel

Back

split

MAIN LEVELLIVING ROOM

MAIN LEVELLIVING ROOM

MAIN LEVELLIVING ROOMMAIN LEVEL

LIVING ROOM

UPPER LEVELBEDROOMSUPPER LEVEL

BEDROOMSUPPER LEVELBEDROOMS

BEDROOMS

LOWER LEVELFAMILY ROOM

LOWER LEVELFAMILY ROOMLOWER LEVEL

FAMILY ROOM

CRAWL SPACE CRAWL SPACE

CRAWL SPACEBASEMENT

BASEMENTBASEMENT

BASEMENTSUB-BSMT

Two

Stor

ey

1

½ Sto

rey

Raise

d Bu

ngal

ow

2nd FLOOR SECOND FLOOR

GROUND FLOORGROUND FLOORGROUND FLOOR

GROUND FLOOR GROUND FLOOR

BASEMENT BASEMENTBASEMENT BASEMENT BASEMENT

3 L

evel

Si

desp

lit

LOWER LEVELFAMILY ROOM CRAWL SPACE

MAIN LEVELLIVING ROOM

UPPER LEVELBEDROOMS

4 L

evel

Sid

espl

it

CRAWL SPACE BASEMENTBASEMENT

SUB-BSMT

LOWER LEVELFAMILY ROOM

LOWER LEVELFAMILY ROOM

MAIN LEVELLIVING ROOM

MAIN LEVELLIVING ROOM

UPPER LEVELBEDROOMSUPPER LEVEL

BEDROOMS

Housing Types and Styles – Detached

3 Level Sidesplit

Raised Bungalow

2-Storey 2 ½ Storey

4 Level Sidesplit 4 Level Backsplit 5 Level Backsplit

Bungalow 1 ½ Storey

Typical DetachedTypical Detached

The Home Buying Process 

10 Steps10 Steps

1.Pre-approval2.Price

determination3.Buying profile4.Product

availability5.Viewing and

feedback

6.Offer7.Negotiations8.Waivers9.Closing10.Agency

Mortgage Pre-Approval

Before we even begin to investigate the marketplace we must have a pre-approved mortgage in place. We can arrange for you to meet with our mortgage consultant at a mutually agreed upon time. Most of the preliminary information can be done over the phone.

 Our mortgage consultant will shop for the absolute best rate and terms possible to suit your needs.

What You Need To Apply For A Mortgage

Credit Check (done with your initial pre-qualifier)

  Salary letter from employer

(and/or T4 slips for the past two years)

  If self-employed, financial

statements & income tax returns for the past two years

  List of assets and liabilities

(including account numbers) 

Verification that the down payment came from your own resources(ie. Bank account, gift letter)

  Copy of agreement of

purchase and sale  Copy of the listing  Survey

Mortgage Financing

CMHC• Less than 25% down

payment• Under Canadian Law all high

ratio mortgages (less than 25%) down must be insured through CMHC.

• This fee ranges anywhere from 0.5% to 3.25% of the mortgage amount which varies according to your down-payment.

• This mortgage insurance is only for the protection of the lender should there be a default in the loan.

Two Types of LoansTwo Types of LoansConventional Mortgage

• 25% or more down payment• Under Canadian Law lending

institutions cannot provide first mortgages in excess of 75% of the value of the property.

Loan Amount as a % of the Value of the Home

Purchase Premium on Total Loan

Premium on Increase to Loan Amount for Portability and Refinance *

Up to and including 65% 0.50% 0.50%

Up to and including 75% 0.65% 2.25%

Up to and including 80% 1.00% 2.75%

Up to and including 85% 1.75% 3.50%

Up to and including 90% 2.00% 4.25%

Up to and including 95% 2.75%

Insurance Premiums

CMHC Insured Mortgage

Purchase Price $250,000.00Down-Payment $12,500.00Mortgage Amount $237,500.00Insurance Fee (2.75%) $6,531.25Actual Mortgage $244,031.25

 The insured portion of the mortgage

is subject to Provincial Sales Tax

ExampleExample

Associated Costs

Deposit - The standard deposit that is submitted with an offer is usually about $5,000.00. This can be adjusted if necessary according to your specific financial situation.

 CMHC Insurance Fee - CMHC fee is subject to PST. Appraisal Fee - CMHC appraisal fee is $235.00, Conventional loans

the fee will vary anywhere from about $75.00 – 150.00. Land Transfer Tax - This is a tax that is paid by the Buyer when any

property in Ontario is transferred. Under a purchase price of $250.00 the fee is calculated at 1% of the purchase price less $275.00.

Associated Costs

Building Inspection - Will vary from about $250.00 – 325.00Legal Fees (Estimated)

Lawyer $450.00Mortgage $200.00DisbursementsTitle Search $100.00Executive % Sheriff’s Certificate $100.00Tax, Building & Hydro Certificates $150.00 – 200.00Adjustments Vary

Land Transfer Tax (see next page)

You may wish to discuss the benefits of title insurance with your lawyer

VALUE TAX

 

VALUE TAX

 

VALUE TAX

 

VALUE TAX

$150,000 $1225 $220,000 $1925 $290,000 $2825 $450,000 $5475

$160,000 $1325 $230,000 $2025 $300,000 $2975 $460,000 $5575

$170,000 $1425 $240,000 $2125 $325,000 $3350 $470,000 $5675

$180,000 $1525 $250,000 $2225 $350,000 $3725 $480,000 $5775

$190,000 $1625 $260,000 $2375 $375,000 $4100  $490,000 $5875

$200,000 $1725 $270,000 $2525 $400,000 $4475 $500,000 $6075

$210,000 $1825 $280,000 $2675 $425,000 $4975 $550,000 $7475

Land transfer tax is a provincial tax payable on the purchase of a home. This tax is paid by the Buyer and is calculated as follows:

0.5% of the first $55,000 plus 1.0% of the amount from $55,001 to $250,000 plus 1.5% of the amount from $250,001 to $400,000

plus 2.0% of the amount in excess of $400,000

Land Transfer Tax Table

Typical Closing Costs

Typical Closing Costs on a purchase of Typical Closing Costs on a purchase of $250,000.00 $250,000.00

5% Down Payment5% Down Payment Legal Fees (all Inclusive) $1,000.00Land Transfer Tax $1,725.00Appraisal (CMHC) $235.00PST on insured portion $617.50Building Inspection $321.00

Typical Closing Costs

It is usually safe to assume that on a $250,000.00 purchase $4,000.00 will adequately cover all of your closing fees. The only time this may be higher is in the case of a property tax adjustment.

 For example: If you purchase a home closing in February and the Seller had pre-paid the taxes until June, he would be credited the amount pre-paid.

 The building inspection fee is due at the time of the inspection.

 The CMHC fee is due at the time of the application.

Price Determination

Price range will be established based on the results of your meeting the mortgage consultant.

 Although you may qualify for a loan amount higher than what you anticipated, you may choose not to purchase up to your maximum qualification level.

 Staying within your comfort zone may be more suitable to you.

Product Availability

Our main frame database will source available listings in the price range, area and with the features you have requested.

 Our data is updated frequently throughout the day.

 We will keep you fully updated on all new properties as they become available.

 

SelectionsOur job is to assist you in selecting those properties that suit your needs.

 Through the process of elimination, we will choose those homes that represent the best value.

 At any give time there will be only a handful of homes that you will even consider.

Power of Sales

• Owner defaults on loan• Lender takes property back Scenarios1. there is more mortgage owing on the property than what the

property is worth2. there is equity in the property that must be returned to the

Seller. The lender must try to obtain the best price for the

home.

Viewing & Feedback

Appointments will be made to view the most appropriate homes.

Asking questions and taking notes will prove to be very beneficial.

Feedback is critical in order to ensure that we are on the right track.

Express your thoughts!

1. Usually an owner will ask between 2 – 4% above market value for the home, therefore there is usually some flexibility in the asking price.

2. Sometimes an owner will price his home very close to or even slightly under what comparable homes have sold for, therefore there is usually very little if any flexibility. Usually these properties attract all the attention and in many cases generate more than one offer.

3. Depending on condition, location, upgrades, etc. some homes will sell for more or less than comparable homes.

 A CMA will be prepared for you advising you of recent market activity in the area.

How much do we offer?

Negotiations

Who is representing you?Who is representing you? 

Under Buyer-Agency it is our duty and obligation to represent you – OUR CLIENT.

 Our Goals and Objectives are to get you the best possible home at the best possible price with the least amount of hassles.

 

What is an Agency Relationship? It is the relationship an agent has with his/her client/customer.

Sub-Agent works with the Buyer but for the Seller.  Buyer-Agent works with the Buyer and for the Buyer.  Dual-Agent works for neither the Seller nor the Buyer. This

situation would arise when the Buyer and Seller Agent are the same real estate firm.

  All prospective Buyers have the right to representation.  Agency Relationships must be disclosed to all parties involved.

Waivers & Follow-Up

Once your conditions have been fulfilled they are removed from the offer via waiver and the deal becomes firm and binding.

We look after forwarding all of the paper work to your solicitor and mortgage consultant.

Meet with mortgage consultant

Choose a lawyer

Arrange for moving company

Arrange for utility transfer/hookup+ house

insuranceArrange for keys

Arrange for school enrollment

Change of address at post office

Checklist

Helpful Resources

Canadian Mortgage and Housing CorporationMultiple Listing ServiceThe Canadian Real Estate AssociationICX - Commercial Listings across CanadaThe International Real Estate FederationTerra Nova Financial Services Inc.

Thank You

Joanne Joanne LozinskiLozinski

Sales ConsultantSales Consultant

RE/MAX RE/MAX Professionals Professionals

Inc.Inc.905-270-8840905-270-8840