Where there's a Will, there's a way!

It wasn’t until my wife and I had our first child that we turned our minds to wills. This was notwithstanding the fact that I had been through law school, been “called” as a lawyer, and practiced for a number of years.

For me, it was one thing to fail to make proper arrangements between myself and my wife but it was another entirely to fail to do so with a young child. Practicing in wills and estates and handling estate litigation files, I firmly believed, as I continue to, that proper estate planning is just another aspect of being a responsible, diligent parent. Estate litigation is a booming practice, and not one  you want your family involved in at the best of times.

Without a will, your assets are divvied up according to a government scheme, one that you may not agree with. You best protect your loved ones and the assets which you worked  so hard to accumulate during your lifetime by having a valid will and reviewing it on a periodic basis to ensure that it reflects your current wishes.

Perhaps one of the reasons why I hadn’t attended to a will previously is, quite frankly, I wasn’t worth much money. I reasoned, why would I care when there wasn’t much to divide up?

There were two specific reasons why this objection was outweighed after the birth of our daughter. First, it allowed us to set up a trust for our daughter, which would allow us to leave our estate to her and ensure that she was properly cared for but to make certain that the funds would be overseen by a “trustee”, in our case a family member, to ensure she wasn’t provided with a whack of cash at a young age (in case she thought that a Ferrari was preferable to the school bus).

Second, we could appoint guardians, in the event that both my wife and I passed away. This is a difficult, but extremely important decision.

There are other steps that my wife and I took in conjunction with drafting our Wills, as a part of our overall estate plan. First, we ensured that our home was in joint names, which ensured that the other would receive it in the event that one of us passed away. We updated the beneficiary designations on our RRSPs and life insurance policies to ensure that it was each other that we had appointed.

In our case we also drafted two separate documents. Enduring Powers of Attorneys allowed us to appoint someone to make financial decisions for each of us once we lost the ability to make decisions on our own. We also executed Representation Agreements, appointing each other to make personal, mainly health-related decisions, after we lost the ability to make decisions on our own.

Finally, my wife and I prepared a list of our assets, which we update from time to time. This can be very helpful for the person that administers your estate and prevents them from having to rifle through your mail or e-mail inbox (if they can find the password) to get your account statements. If you have a safety deposit box or safe at home, you should provide directions on how to access them.

None of the steps suggested above is  overly complicated or expensive or time-consuming, even with a lawyer. They form just one of the many steps that my wife and I took as new parents (including abandoning both our night life as well as sleeping in!) and ultimately provided some reassurance that we were doing our best to safeguard our new bundle of love.

For more information on this topic please contact:

Michael Sinclair

Lawyer
msinclair@kzellaw.com 

Vancouver Real Estate Investment Seminar

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Expanding your Business Through Qualified Leads

What person, who either owns their own business or is in sales for a corporation isn't looking for qualified leads to add to their client roster?  As a Mortgage Broker in the Lower Mainland I was in that same boat.  Then I decided to join some local networking groups to expand my reach into the Vancouver market.

I wound up joining BNI, a Business Referral Group that works on the method of "givers gain".  Each member attends our meetings with qualified leads to give to other members.  I have to say....in the short 4 months I have been part of the group, I have already grown my business by 20%!!! 

The reason I am sharing this with you is because our BNI group is looking to expand.  We are hosting a Visitor's Day this Thursday at the RiverRock Casino in Richmond and we would love to business owners or sales representatives to come out and meet our group.  Each guest of our Visitor's Day will get 60 seconds to present your business, tell us what a "good referral" would be for you and to hand out business cards to all in attendance.  We are expecting upwards of 40 - 50 people so please let me know if you are interested in attending and I will put your name on the list.

The cost is $20 but that includes a yummy hot buffet breakfast (and you get a tax receipt).

Looking forward to seeing you on Thursday!

Kind Regards,
Erica Wells
Mortgage Broker
Verico Complete Mortgages

Learning a Little More About Critical Illness Insurance for Your Family

Now a days getting cancer or having a heart attack doesn’t necessarily mean that you will die.  However if you do not have a "nest egg" it could mean financial hardship for many years to come for you and your family.  Critical Illness (CI) Insurance is one way to protect yourself so you don’t have to sell your house to save your life.  Being relatively new as an insurance product there is a lack of knowledge on how CI works.  In this article we will give you a better understanding on how it works and why you should consider it now or when you decide to purchase a home.

CI insurance is a lump sum benefit that pays out 30 days after diagnosis of a CI such as cancer, heart attack or stroke (there are 22 to 24 conditions that are covered).  Typically the option of an early intervention amount prior to the 30 days in the event your need surgery is also available.  This amount is usually limited to 10% of the prescribed benefit.  Most benefit amounts you can apply for range from $25,000 to $2million.  The different types of CI insurance vary from term (price changes at the end of the term) to permanent (fix price).  If you go with the permanent option you do have the choice of return of premium at expiry which is usually the age of 75.  This means that if you never experience or claim a CI your premiums will be returned to you at the age of 75 (a.k.a forced savings). 

There are available cancer treatments that not covered by our public system.  If you became ill wouldn’t you want every option possible? CI insurance gives you the flexibility to explore those options that would not otherwise be available if you did not have the money.

Some things to think about if you were to become critically ill.  You will most likely have to go on disability if it is provided through work or a private plan.  The disability benefit amount may be just enough to cover your current living expenses and mortgage costs. Additional expenses that may arise such as non-covered medication, private surgery, paying an employee to cover you while off work, gas for those trips to the hospital, etc. If you don’t have a disability plan or additional savings you will have to either liquidate assets or go into debt to pay them.  This may mean selling your house which you worked so hard for.

CI insurance gives you flexibility regarding financing medical decisions so that hard choices become easy ones.  Everyone’s situation is different and making sure you seek out the right professional to explain CI insurance is important. 

For more information on how Critical Illness Insurance or Life Insurance could work best for your family please contact:

Robert Ng-A-Fook B.Sc Econ
Investia and Hyland West Financial Services
Investment Funds Advisor/Independent Insurance Broker
Cell:      604-290-1764
Phone:  604-688-5158

robert.ngafook@telus.net

Generic Mortgage - Not when you have a Mortgage Broker working for you!

When any conversation turns to mortgages, it's usually about rate. Of course, low rates are an important component to paying less interest over the long term, but there's much more to consider than just rate. In fact, if you select your mortgage entirely on the lowest rate, you may actually lose out in the long run. Many people don't realize that a mortgage with a rock-bottom rate may have higher fees and penalties, and more restrictive terms.

Across the country, mortgage brokers are doing an excellent and diligent job in helping homebuyers and owners get the best mortgage for their needs, one that has two components – a great rate and the right mortgage privileges, a combination that could save you thousands over the long term. That's why a mortgage broker will help you consider all of the components of mortgage design, like:

· term

· fixed versus variable rate

· payment flexibility

· pre-payment privileges

· restrictions, fees, penalties

· mortgage portability, assumability

· and more

Mortgage brokers too have a mortgage solution for almost any situation: for entrepreneurs, vacation or investment properties, new Canadians… even mortgages that repair your credit rating. And 30-year amortizations and no downpayment mortgages help make homeownership affordable for more Canadians.

Clients of independent mortgage brokers don't want their mortgage options off the shelf from one financial institution. They appreciate that mortgage brokers have access to more than 50 different lenders, which compete for their business. This choice is becoming more critical for today's homebuyers and owners because they are asking questions; they want to compare rates, have their mortgage designed for their needs, and understand how to make their mortgage work for them. The answers – and the product options – are coming from mortgage brokers.

Ongoing information and advice are also critical to ensuring you reach your financial and homeownership goals, because your needs may change over time. Mortgage brokers receive and review a continuous flow of updates from a wide variety of lenders and other industry professionals, so they’re always aware of what’s happening in the mortgage marketplace. The most important and relevant insights are shared with their clients. Your home is an enormous financial commitment, which means you need a mortgage broker who keeps in touch with you during your mortgage years. You deserve that kind of dedicated attention.
Simply put, mortgage brokers are doing more than just offering you a mortgage off the shelf, they offer advice, choice, specialized products, enhanced information on an ongoing basis and personalized service. All very important considerations if you are a first-time buyer, have questions about your current mortgage or renewal, are worried about the interest on your debt load, or if you’re thinking about a vacation or investment property.

If you don't want an off-the-shelf mortgage, then contact a mortgage broker to get an assessment of what you need. Make sure your next mortgage is designed around you!

Summer Housing Market Trends Toward Balance after an Active Spring Season

VANCOUVER, B.C. – July 5, 2011 –Home sellers outpaced buyers on Greater Vancouver’s Multiple Listings Service® (MLS®) in June, drawing the market back toward balance this summer.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, at- tached and apartment properties reached 3,262 in June, a 9.8 per cent increase compared to the 2,972 sales in June 2010 and a 3.4 per cent decline compared to the 3,377 sales in May 2011.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,793 in June. This represents a 4.5 per cent increase compared to June 2010 when 5,544 properties were listed for sale on the MLS® and a 2.3 per cent decline compared to the 5,931 new listings reported in May 2011.

Last month’s new listing total was 9.8 per cent higher than the 10-year average for June, while residential sales were 7.3 per cent below the ten-year average for sales in June.

“With sales below the 10-year average and home listings above what’s typical for the month, activity in June brought closer alignment between supply and demand in our marketplace,” Rosario Setticasi, REBGV president said. “With a sales-to-active-listings ratio of nearly 22 per cent, it looks like we’re in the upper end of a balanced market.”

At 15,106, the total number of residential property listings on the MLS® increased 3.1 per cent in June com- pared to last month and declined 14 per cent from this time last year.

The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 8.7 per cent to $630,921 in June 2011 from $580,237 in June 2010.

“The largest price increases continue to be in the detached home market on the westside of Vancouver and in West Vancouver,” Setticasi said. “Since the end of May, the benchmark price of a detached home rose more than $147,000 on the westside of Vancouver and over $80,000 in West Vancouver. Detached home prices in Richmond, however, levelled off slightly, declining $25,000 in June.”

Sales of detached properties on the MLS® in June 2011 reached 1,471, an increase of 29.1 per cent from the 1,139 detached sales recorded in June 2010, and an 11.8 per cent decrease from the 1,667 units sold in June 2009. The benchmark price for detached properties increased 13.4 per cent from June 2010 to $901,680.

Sales of apartment properties reached 1,266 in June 2011, a 0.6 per cent increase compared to the 1,258 sales in June 2010, and a decrease of 29.3 per cent compared to the 1,790 sales in June 2009. The benchmark price of an apartment property increased 3.5 per cent from June 2010 to $405,200.

Attached property sales in June 2011 totalled 525, an 8.7 per cent decrease compared to the 575 sales in June 2010, and a 34.5 per cent decrease from the 802 attached properties sold in June 2009. The benchmark price of an attached unit increased 6 per cent between June 2010 and 2011 to $522,424.

The real estate industry is a key economic driver in British Columbia. In 2010, 30,595 homes changed ownership in the Board's area, generating $1.28 billion in spin-off activity and 8,567 jobs. The total dollar value of residential sales transacted through the MLS® system in Greater Vancou- ver totalled $21 billion in 2010. The Real Estate Board of Greater Vancouver is an association representing more than 10,000 REALTORS® and their companies. The Board provides a variety of member services, including the Multiple Listing Service®.

Source: www.rebgv.org

For more information on real estate, statistics, and buying or selling a home, contact The Vancouver Home Team at www.VancouverHomeTeam.ca or 604-230-1111

The price of Term Insurance is Dropping!

If you willing to redo your paramedical and possibly your blood work the benefit could save you hundreds of dollars over the term of your life insurance policy.

Let me explain. 

Not unlike mortgage interest where the choice is yours to lock in or stay variable when signing the initial mortgage paperwork; term insurance, created to protect your biggest asset during your debt and child rearing years, is dropping in price and control to re-do the policy is yours. 

The reason for falling premiums is due to death rates decreasing.  Term insurance is priced based on a time duration of the term taken and mortally rates at the time; term 10 is the most common although 5 year terms are least expensive.   

If you are willing to re-visit your life insurance agent for a price quote after 5 years of your term insurance placement, you will find the price is likely to be cheaper than when initially purchased; sometimes up to a 25% savings going forward.

Term insurance is simple, underwritten at time of application and paid directly to your beneficiaries’ tax free.  Bank mortgage insurance coverage has the beneficiary as the bank, your premiums are level although your mortgage is decreasing and your family does not receive the death benefit. Bank insurance uses blended smoker/non-smoker rates causing higher pricing for non-smokers. Most bank mortgage insurance is NOT underwritten at time of application meaning your mortgage payoff is decided at time of death.

Information is the right of everyone; pass it on so we make better choices and keep your money in our hands.

For additional information on Term Insurance and how you may benefit on a term insurance  "refinance", please contact me.

Sandy Allen

Sun Life Financial Insurance & Mutual Fund Agent– White Rock, BC

Sandy.allen@sunlife.com

Canadian Mortgage Penalties

This is one of the most difficult and controversial topics related to mortgages.  However, below is a general overview on how penalties work.

Most lenders charge an early payoff penalty on closed mortgages if the debt is paid prior to the maturity of the term. The lending institution must describe the penalty they could charge on the mortgage document.

The most common penalty is:

The greater of three months interest penalty OR  the interest rate differential.

In other words, whichever amount is the larger of these two figures will be your penalty.

One very important point of mention is what when  you are calling your lender to find out what your mortgage penalty will be upon payout (for a refinance) make sure you ask your lender to provide you with the penalty amount AFTER taking into consideration your pre-payment allotment for the year (usually about 20% of your total mortgage balance).  You will be using the proceeds from your new, refinanced mortgage to pay your pre-payment allotment and you should make sure that you aren’t charged for that amount.  Lenders generally won’t take the pre-payment amount into consideration unless specifically asked too and it can make a significant difference in your penalty amount.

THREE MONTHS INTEREST PENALTY (most commonly used on variable rate mortgages)

If you are paying off your mortgage before the maturity date, most lending institutions charge three months interest penalty (or an interest differential penalty).

Your present mortgage balance is multiplied by your current interest rate and multiplied three.

INTEREST RATE DIFFERENTIAL / LOSS OF INTEREST (most commonly used on fixed rate mortgages)

This usually means the difference between the interest rate on your mortgage contract compared to the rate at which the lending institution can re-lend the money.

For example:

If your mortgage has a balance of $125,000 at 9.25%, you have 2 years left to go and the current 2 year mortgage rate is 6.25%. Then the lending institution will probably charge you -

$125,000 X 24 months X 3% (9.25 - 6.25) = $7,266.21

However, just to further confuse the issue, the penalty above has not been present valued. This is when a lender charges a lower penalty because you are paying all of the 'extra' interest (in the example 3%) now, not over the remaining term. Some lenders present value, other lenders do not.

Costs Associated with Buying a Home

Costs of Buying a New Home

The key cost consideration for any home purchase is the price of the home itself. When you buy a brand new home from a builder, the cost typically includes the base price of the home (and lot) plus the price of any upgrades you choose, from fireplaces to additional landscaping.
As well, there are other costs that you should be aware of right from the start, from legal fees to mortgage insurance premiums, which can apply to a home purchase.
GVHBA believes it is a good idea to consult with your professional new home builder and your mortgage lender early in the buying process about the specific items and typical costs that will apply to your situation. That way, you can easily budget for them and proceed with confidence, knowing that you will not be faced with unexpected last-minute expenses.

Sales Tax

When buying a newly built home up to $350,000, purchasers are entitled to a rebate of 36% of GST, up to $8,750. Between $350,000 and $450,000, the rebate is reduced on a sliding scale, and there is no rebate on homes above $450,000. The rebate can be assigned to the builder at the time of purchase, or you can claim it directly afterwards. Practices vary, so find out up front if prices quoted by your new home builder are inclusive or exclusive of tax and the rebate.

Mortgage Insurance

A high-ratio mortgage (75% or more of the total purchase price of the home) must be insured against default. There is a small application fee as well as an insurance premium ranging from 0.5% to 3.75% of the total purchase price. The premium is based on the size of your down payment and can be paid up front along with your property taxes or added to the mortgage amount.

Appraisals

Your mortgage lender may require a property appraisal, depending on a number of factors. For instance, for a brand new home that's already built, an appraisal is normally needed.

Surveys

Your lender may also require a property survey to verify boundaries, measurements and structures, and to identify any easements, rights-of-way or encroachments. Your builder may be able to provide you with survey documents at no cost. Alternatively, title insurance can satisfy the lender's requirements and it will also protect you against title defects.

Water Certification

If your new home comes with its own well rather than being hooked up to municipal services, your lender may require the flow and quality of the water to be tested and certified.

Legal Services

The purchase of real estate requires the services of a lawyer (or notary) to search the title, draw up mortgage documents, register new ownership and liens and look after other closing details such as disbursement of funds. You may also want your lawyer to review the contract between you and the builder (Agreement of Purchase and Sale) before you sign it. Legal costs vary considerably, depending on lawyers' practices and the complexity of your transaction. Get recommendations and spend a little time comparing firms to ensure you get the best value for your money.

Land Transfer Tax

The B.C. government taxes the transfer of real estate, calculated at 1% of the purchase price up to $200,000 or 2% of the price exceeding this amount.

Home Insurance

Your home must be fully insured before mortgage lenders can release the funds for your purchase. This protects both you and the lender.

Moving Costs

Determine the amount of work you are willing do yourself, from packing to unloading and setting up in your new home. Contact several moving companies to get an idea of prices and levels of service available. For a more accurate estimate, you can ask a representative to come to your home.

Appliances, Furniture, Drapery

Does the home come with appliances or will you need to invest in new ones? Will you need new blinds and drapery for the whole house? Would this be a good time to upgrade your living room set? It's a good idea to budget for these things in advance. Talk to your lender about financing options that can help you afford the things you need to get started in your new home.

Home Maintenance Equipment

Do you have the equipment you need to maintain your home properly? Consider your needs throughout the seasons, from lawnmower to snowblower. Will you be able to purchase equipment as the need arises? Can you include it in your initial investment in your home, or will you require additional financing? 

Courtesy of Greater Vancouver Builders Home Owners Association

A Breakdown of the new Canadian Mortgage Rules

Recent changes by the Canadian Government that take effect in March of 2011 will make it more restrictive for residential real estate mortgages. The changes apply to all lending institutions in Canada and more importantly these new rules impact your ability to purchase a new home and/or refinance an existing property.

Fear not, knowledge is power and I am here to demystify these recently announced changes and work with you on a mortgage strategy that is right for your situation. While the changes do put restrictions on how much money can be borrowed and how long it can be financed for, we are still in some incredible times for cost effective borrowing. Let's take a look at what these changes mean to you...... 


Change #1: Amortization period reduction

The Gov't has reduced the maximum amortization period from 35 years to 30 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent.
In a nutshell this is being done to assist Canadians in ensuring they can pay down their mortgage in a realistic time frame. This will significantly reduce the total interest payments  made on the overall mortgage, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.

What this means to you: You need to ensure you are not buying more house than you can afford. Your monthly payments will be higher with a shorter amortization period. Make sure that your cash flow is sufficient to make all of your obligations.  For instance, with an average mortgage amount of $350K with a 5 yr term and 4% interest rate.  Going from a 35 year amortization to a 30 year amortization will increase the monthly payment amount by approx. $115 per month.

Change # 2: The maximum amount in terms of home value to debt has been lowered

The Gov't has lowered the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.

What this means to you: It will be more difficult to use your home equity as a revolving line of credit. Decisions such as renovations, new vehicles, investments and vacations need to be weighed more carefully.  The days of using your home equity as an ATM are coming to an end so choose your expenditures wisely and plan for the future. You also need to ensure that you have 15% equity available for your financing requirements (including refinancing) or you may find yourself without a mortgage lender willing to support you. This could be especially challenging for an existing homeowner looking at refinancing. Plan ahead!

Change #3: The Gov't is getting out of the business of backing homeowner loans
The Gov't is withdrawing insurance on backing lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers. 

What this means to you: Do not plan on having your home equity to shop with. Lines of credit will be granted at more traditional (higher) interest rates and you will need to shop around for a good deal.
While these rules will have a longer term dampening impact on some purchases, the good news about all of this is that the Bank of Canada has the pressure off to raise interest rates.  Analysts are saying that we shouldn’t see any significant hikes in prime rate for the near future.  In terms of what this means for the housing market….analysts were predicting a slight slowdown in 2011 anyway.  They aren’t projecting these new rules to have any more of an impact than a slight drop in demand and some potential price normalization in some markets.  If anything we might see an early start to the busy spring housing market as people taking advantage of the old rules while they are still being offered.

I invite you to work with me on a mortgage strategy that will meet your needs and take as much advantage of timing and the new rules as possible. Call or email me today for assistance.

Local:          604.290.4181
Toll Free:     1.800.983.2542
Email:          elwells@telus.net

* O.A.C., E, & O.E.