Home Buying and Selling

Property Taxes in Canada

Property Taxes in Canada

Property Taxes in Canada

For a lot of first time homebuyers understanding how property taxes work in Canada can be intimidating. Some questions one might have could simply be; where is my money going? Some of the revenue that’s collected via property taxes goes toward both the municipal and provincial governments. But understanding exactly where that money is going is an important part of homeownership. RE/MAX Canada recently shared a great article about this very topic and have explained the process in an easy to understand way. 

“Property taxes are mandatory annual payments that owners of real estate property, such as land, houses, or commercial buildings, must pay to their municipal or provincial government. Serving as a primary source of revenue for these governments, property taxes play a crucial role in financing critical community services and infrastructure. These can include schools, libraries, parks, road maintenance, public transportation, emergency services, and many more amenities that help maintain the quality of life within a community.” — RE/MAX Canada

It’s important to learn about how these taxes work in order to be a responsible homeowner. In this blog post, we’ll go over why it’s important to understand and why you should consider what the property taxes would be when creating a budget. 

Municipal and Provincial Taxes – How They are Calculated?  

It makes sense that property taxes would vary depending on the municipality and province that you’re residing in. Each city has its own way of assessing taxes and what they’ll go toward. This assessment is managed by each province’s assessment body and is based on each property’s location, if it’s had improvements or renovations, the age of the property and the size. 

Then we have municipal tax rates to consider as well, local municipalities determine the property tax based on its value at the time. According to RE/MAX Canada, this is done by mills; “one mill equals $1 in property tax levied per $1,000 of a property’s assessed value.” These rates can vary depending on the municipality of course. 

“The formula to calculate the property tax is Property Tax = Property Value Assessment x Municipal Tax Rate. For example, if a home is valued at $500,000 and the municipal tax rate is 0.5%, the homeowner would owe $2,500 in property taxes for the year.” – RE/MAX Canada

We recommend doing some research or asking your REALTOR to help you better understand how these taxes are calculated. This again, is an important part of setting your budget before you go out and view listings. Let’s now look at how taxes may vary form province to province. 

Taxes May Vary Province to Province

Now that we understand how property taxes are calculated, let’s look at how they are assessed on the provincial level and how they work. Since each province has its own ways to determine their property taxes, understanding how it works is another important part of the new homeownership process. 

In the report by RE/MAX Canada, they explained it as follows; each province has its own way to calculate and assess property values – so it only makes sense to research what your province’s taxes are and how that will affect your monthly budget. Since these taxes are an important part of the provinces revenue, the municipalities as well in fact, it means the taxes themselves can vary a great deal from province to province. This can also be determined by the real estate market at the time as well. 

“The real estate market conditions can differ significantly between provinces, affecting average property values. Provinces with higher average property values might generate more tax revenue even with lower tax rates, while provinces with lower average property values might need higher tax rates to generate the necessary revenue.” – RE/MAX Canada

Learning more about your provinces property taxes and your municipality property taxes are such an important step, as we mentioned previously. Now that you have a better understanding of how they are calculated and assessed you can start to consider your budget for your new home and you can find out what the property taxes are in your area. Contacting an experienced real estate agent can help make this entire process easier, since they are knowledgeable and have experience with this. 

Contact the VanDinther Team 

Contacting the VanDinther Team will be well worth it, they are a team of highly knowledgeable and experienced real estate professionals. This means that you can rely on their ability to help you find the home you’ve been looking for and help you to stay within your budget. 

Do you have any questions or concerns about the real estate market or are looking to list your property? Please feel free to contact the VanDinther Team today, they can be reached by phone at 905-330-2002 or by email at info@loriv.com. The VanDinther Team looks forward to helping you make the right moves. 

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Alternative Mortgage Lenders

Alternative Mortgage Lenders

Alternative Mortgage Lenders 

Have you heard of Alternative Mortgage Lenders? In this blog post we hope to explore what you can expect when you choose this option for a mortgage lender. At this time the Bank of Canada continues to raise interest rates and this has had an impact on the mortgage market. The effect this is having means that some people are being turned away from even getting a mortgage and others are paying high prices. 

“The conventional five-year mortgage lending rate is inching closer to six percent again. This also means that the mortgage stress test, which determines if you qualify for a home mortgage based on income and expenses, is getting harder to pass since it is the interest rate plus two per cent. So, for example, if the national average price for a home is $700,000, and you are making the national median gross income of $67,000, you will be denied a mortgage.” – RE/MAX Canada

Another issue that was reported by RE/MAX Canada was that in some cases someone might be rejected because of the current real estate market. This might be due to the fact that the real estate prices are lower or other market factors. 

In the report released by RE/MAX Canada, they stated that due to these sorts of conditions applicants might choose to go with an alternative mortgage lender. The question now becomes, what is an alternative mortgage lender? We hope to help answer that question in this blog post, at the end of this blog we’ll provide you with information to get in contact with the VanDinther Team. 

What are Alternative Mortgage Lenders? 

We are very familiar with the typical way to get a mortgage, usually this is through a bank or credit union. In some cases, one might have to go about this in a different way, these are what we call alternative mortgage lenders. 

“Alternative mortgage lenders are financial institutions offering mortgage loans outside the conventional banking system. They serve as substitutes for traditional banks and credit unions, allowing individuals, whether they are self-employed applicants or borrowers with poor credit scores, who might not qualify for a loan.” – RE/MAX Canada 

The alternative lenders will still look at the same factors that the banks and credit unions would. Such as the property value and the applicant’s assets. There are some great benefits to choosing an alternative lender, as well as some risks. 

Benefits & Risks of Choosing an Alternative Mortgage Lender

There are always going to be benefits and risks associated with choosing an alternative mortgage lender. RE/MAX Canada listed these risks in a recent report to help us better understand. This is important because we want to be able to consider all of the options available before making a decision. Listed below are the risks and benefits according to RE/MAX Canada. 

Risks: 

  1. Interest Rates 
  2. Fees
  3. Predatory Practices 
  4. Regulations 

“Unlike the larger financial institutions, the alternative mortgage lending market is not as regulated or monitored by the government. Put simply, there is a lack of oversight, meaning fewer consumer protections exist. This will require borrowers to do their due diligence by studying the company’s compliance, legitimacy, and reputation.” – RE/MAX Canada 

Benefits: 

  1. Flexibility 
  2. Personal Finance 
  3. Speed 
  4. Housing Market 

“Amidst the once-in-a-century pandemic, the Canadian real estate market witnessed an unprecedented surge, thanks to the Bank of Canada (BoC) slashing interest rates to nearly zero. Numerous individuals capitalized on this lucrative opportunity by applying for mortgages to acquire residential properties. Although some applicants may have faced delays or insufficient income, alternative lenders provided viable options to leverage current market trends and maximize low interest rates and capital appreciation.” – RE/MAX Canada 

Now that you’ve learned about alternative mortgage lenders you have some decisions to make. Asking yourself if this is the right choice for you or if you might qualify for a more traditional mortgage lender. That’s the benefit of working with a professional real estate agent, they are able to offer you advice about the market and best practices. 

Contact The VanDinther Team 

The VanDinther Team consists of a group of highly qualified and experienced professionals. This means that you can rely on their expertise and advice when it comes to not only the real estate market, but also the right kind of mortgage lender. 

If you have any questions or concerns about the real estate market or are looking to list your property, please contact the VanDinther Team today. To contact the VanDinther Team please call us at 905-330-2002 or email us at info@loriv.com. All of us on the VanDinther Team look forward to helping you make the right moves. 

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Advice for First-Time Homebuyers 

Advice for First-Time Homebuyers

Advice for First-Time Homebuyers 

This is an exciting time, you’re looking at listings and the prospect of being a homeowner. Not only is this a big step but it’s also an opportunity to make a major investment. Being a new homeowner comes with a lot of responsibilities, this blog is here to help you navigate this new world of being a first-time homeowner. 

RE/MAX Canada recently posted an article with some fantastic advice for first-time homebuyers. The article will review some of the government programs that are available to you that help to make this whole process easier and more affordable. 

When we get to the end of this blog we’ll give you the contact information about The VanDinther Team, so you can start your journey of being a first-time homeowner. Now, let’s learn about the importance of budgets and mortgages. 

Budgets and Mortgages 

The first step in the process of buying a home is determining what your budget is going to be. Determining your budget will help you know what listings you should be looking at, what price points, etc. This will be the very first step you take in your homeownership journey. 

There are some things you’ll want to consider when planning your budget, such as your financial health. What do your savings look like? Will you have enough for a downpayment? Asking yourself these questions are very important when starting out on this budget planning process. There are also other financial obligations you’ll have to consider as well such as legal fees, land transfer tax, moving expenses and more. That’s why being prepared and organized is so important when you’re planning on buying your first home. 

The next aspect of planning to become a new homeowner is applying for a mortgage. RE/MAX Canada explains the importance of gathering all of the necessary information that will be required. You’ll be required to show your proof of income, employment and your credit history. There are mortgage brokers that are available to assist you in this process, as it can be overwhelming at times. 

The mortgage broker will also help you shop around for the best deal. There are resources available to help if you don’t have a mortgage broker such as a mortgage calculator and other websites that can help. Finally, when you’re shopping for a mortgage you will also want to consider the payment schedules, term rates, fixed or variable mortgages and more. If you need assistance with the financial side of this process there are government programs available and you should consider them as well. 

Government Incentives to Consider

For some first-time homebuyers it’s good to consider what government incentives and programs are available. These incentives and programs are great tools for you to use and they can help you save money, including tax incentives. Listed below are three different programs that are available to help homeownership become more possible for those who otherwise might not be able to.  

  • First-Time Home Buyer Incentive Program: This program “provides a shared equity mortgage with the Government of Canada,” and helps to reduce mortgage payments and also increases your borrowing abilities. The incentive offers a five percent discount on the purchase price of a home and ten percent on a new build. 
  • Home Buyers’ Plan (HBP): With this plan you’ll be able to withdraw “$35,000 from your Registered Retirement Savings Plan (RRSP) tax-free to put towards your down payment.” This is a great program for new homebuyers who might not have enough for a down payment. 
  • First Home Savings Account (FHSA): This program allows you to save for your down payment but also earn tax free interest. The contributions to this program are tax-deductible and the interest you earn on this account will be tax free. The FHSA will allow you to save for your down payment quickly. 

“As a first-time homebuyer in Canada, you may be eligible for various government programs to help you achieve your homeownership goals. These programs offer financial assistance and tax incentives that can make homeownership more accessible and affordable.” – RE/MAX Canada

Making an Offer 

The time has come for you to make an offer on your very first home and the pressure is on. There’s a lot to consider once again and this time it has to do with the purchasing cost, the closing date and the sale conditions. 

As a first-time buyer you’ll need to negotiate with the seller on the terms of the sale. It’s highly recommended that you go with a professional real estate agent to make this process easier. It’s also important to have a home inspection done. Having professional home inspections are recommended and should be done before you close the sale and sign the papers. 

Once you’ve reached a deal with the seller you can start the process of buying your home. You’ll now be required to to sign a lot of papers and you may need to transfer funds and have the property registered. 

Making sure you have a reliable and experienced real estate agent is so important. They’re able to walk you through this process and help you find the home of your dreams. The VanDinther Team works hard to make these dreams possible with all of their clients, and can offer some great advice for first-time homebuyers

Contact The VanDinther Team 

Helping you make the right moves is what the VanDinther Team does best. This is an exciting process, if you have any questions please feel free to reach out to the team today. You can contact the VanDinther Team by phone at 905-330-2002 or by email at info@loriv.com

Have you been wondering what your home might be worth? Try our “What’s My Home Worth” calculator and find out. The VanDinther Team is ready and looking forward to helping you make the right moves. 

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